RE2 - missed questions

The current value of a property is $105,000. What was the original cost of the property if there has been a 30% loss in value?

$150,000 BC; Take the current value of the property divided by the total depreciation: 100% ‒ 30% = 70%, then $105,000 ÷ 0.70.

Jill received a semi-annual tax bill of $2,250. Property in her area is assessed at 50% of market value. If the tax rate is $3.50 per $100, what's the estimated market value of Jill's property? Round to the nearest whole dollar.

$257,143 BC; Multiply the semi-annual tax bill by two for a total tax bill ($4,500). Divide the tax bill by the tax rate (.035) for assessed value: $4,500 ÷ .035 = $128,571.42, which is 50% of market value. Multiply the assessed value by two and round: $257,143.

The Bensons are looking at buying a $650,000 property with a 30-year loan at a 3.125% interest rate. How much would their monthly principal and interest amount be? Use 4.80738 as the factor for a 30-year loan at a 3.125% interest rate.

$3,124.80 BC; The estimated payment is $3,124.78. Remember that $650,000 ÷ 1,000 = 650. Then multiply the factor for a 30-year loan at a 3.125% interest rate (which is 4.80738) by 650.

Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?

2048 BC; Depreciation may be taken for 39 years for commercial non-residential properties.

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?

A land contract BC; With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.

Which term describes the addition of alluvion land to a property through the natural process of accretion?

Accession Accession is the addition of value to property through labor or the addition of new materials, including those added by nature through accretion.

________ is the term used to describe paying off a loan over time.

Amortization

What is a real estate syndicate?

An organization with many investors who jointly participate in a real estate investment

When must lenders provide borrowers with a disclosure statement regarding finance charges, annual percentage rate, etc.?

At loan application or within three days after loan application BC; The lender must provide disclosure (the loan estimate) at the time of application or up to three days after.

Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What's Clark most likely asking you to provide?

BPO BC; Broker's price opinions are estimates of price in case the lender must take over the property and sell it to an investor or on the market.

Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission?

Both you and Barry BC: Licensees are responsible for disclosing known environmental issues. To not disclose something that you know about leaves you, as well as the seller, open to a lawsuit.

________ is a process in which an appraiser determines a probable range of property values by comparing a group of comparable sales to the subject. The appraiser tries to include both superior and inferior units of comparison such as age, price, etc.

Bracketing

In which form of price determination does the real estate professional often just drive by the property and take photos, then complete paperwork for the lender?

Broker's price opinion BC; A BPO is a broad opinion of price and not a detailed analysis.

How does the Fed maintain a balanced economy?

By regulating the flow of available funds and interest rates BC; The Fed maintains a balanced economy through reserve requirements and discount rates.

May appraise one- to four-unit properties regardless of value

Certified residential appraisers

Michelle and Ben are in the market for a new home. Before getting too far into their search, they start by visiting a mortgage broker to learn more about the mortgage terms they may qualify for and compare mortgage options. What type of system is the mortgage broker using to support this?

Closed CLO BC; Closed CLOs are accessed through an intermediary such as a real estate or mortgage professional.

In the sales comparison approach, the appropriateness of the various comparable sales in relationship to the subject is considered in a process known as ______, where certain factors may be given more weight.

Correlation

A ______ is an amount that shows up on the closing statement in the party's favor.

Credit

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 BC; The seller is required to pay the for January 1 through May 19. The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days (the number of days the buyer is required to pay) = $1,206.84. That's $1,207 if rounded to the nearest whole dollar.

Joe Bob is the grantor of a deed, and is in the final stages of transferring a deed to the new owner, Frank. What must Joe Bob do in order to satisfy delivery and acceptance of the deed to Frank?

Deliver the deed to Frank, his agent or attorney, or the title company issuing the title BC; Joe Bob has to deliver the deed to Frank, his agent or attorney, or the title company issuing the title and acceptance is presumed.

Which type of FSA loan program is serviced by the FSA, but uses government money?

Direct loans BC; FSA direct loans are serviced by the FSA using government money.

Rebecca has granted power of attorney to her partner, Emily. The POA states that if Rebecca becomes incapacitated, Emily can continue to act on her behalf. What type of POA is in place?

Durable BC; A durable power of attorney allows the person who has been granted the power of attorney to act on the grantor's (or principal's) behalf, even if that grantor/principal is incapacitated. Return To Course Home View Exam Results

Which term is defined as land lost due to water, wind, or other natural disturbances?

Erosion BC: iTs defined as land lost due to water, wind, or other natural disturbances.

A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?

External depreciation BC; External depreciation or economic obsolescence is a loss in value caused by an undesirable or hazardous influence offsite.

Which act requires a property manager to send an adverse action letter to the rejected applicant if the decision to reject were based in whole or in part on the applicant's credit score?

Fair Credit Reporting Act (FCRA) BC; This is an FCRA requirement. The adverse action letter must disclose the score, the date it was generated, which agency was utilized, and the factors that adversely affected it.

An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?

Gross rent multiplier BC; GRM is used for income-producing properties of four or fewer units. Properties with five or more units use GIM.

______ determines who the heir or heirs will be if a person dies without a will.

Intestate succession BC; If a person dies without a will, the order of inheritance is called intestate succession. It's a predetermined priority of heirs based on close family relationships (i.e., spouse inherits first, followed by children).

In the real estate business, which professional's primary role is to fund high risk land development/construction projects?

Investor BC: It's the personal investor's role to fund land development / construction projects to hopefully make money on the deal when the properties sell.

Which of the following statements about corporate conveyance of real estate in Texas is true?

It is allowed as long as certain rules are followed.

What does a balloon payment represent at the end of a loan term?

It means that some principal remains at the end of the loan term. A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.

The Doctrine of Relation Back is a/n _______.

Legal assumption that states that something done today will be treated as if it were done earlier BC; The Doctrine of Relation Back says that once the seller deposits the deed with an escrow agent, fulfilling the conditions of that escrow agreement, the deed is considered to have passed to the purchaser on the exact date it was delivered to the escrow agent—even if the purchaser hasn't gone through the escrow process yet.

Who usually represents the lender at a closing?

Lender's attorney BC; The lender is usually represented by the lender's own attorney at the closing.

Which classification of appraiser can perform appraisals of simple residential one- to four-unit properties with a value less than $1 million, but not of properties with greater value?

Licensed appraiser BC; A licensed appraiser can perform appraisals of simple residential one- to four-unit properties with a value of less than $1 million. and

Which practice involves talking the consumer into refinancing over and over so a lender can charge fees?

Loan flipping BC; Loan flipping is a tactic that predatory lenders use.

Which of the following is one benefit to business owners for leasing instead of buying real estate for their business?

Monthly rent is a tax deduction as a business expense. BC; A benefit to business owners who lease real estate for their business is that monthly rent is a tax deduction as a business expense.

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value BC; Lenders won't lend on what they can't recoup. Therefore, the loan amount will be based on what a lender would hope to recoup, should a foreclosure sale be necessary.

What are the two programs available through the TDHCA that help very low-income to moderate-income families afford housing?

My First Texas Home and Texas Bootstrap Loan Program

Which of the following statements about improvements and lease agreements in Texas is true?

Neither the landlord nor the tenant is required to make improvements to a leased property.

Nonny is purchasing a rental property where the tenants pay month-to-month rent. Which of the following is the most likely way for the rent to be prorated?

Nonny will receive prorated rents beginning the day of closing.

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step?

Obtain a pre-qualification letter. BC; Before Percy even begins looking for properties, he should get pre-qualified. He may also consider getting pre-approved.

What is a wrap-around mortgage?

One that may involve seller financing

How many members belong to the Texas Apartment Association?

Over 11,000

Which of the following is a piece of general data an appraiser may gather?

Population size BC: General data is related to the area where the property is located, not the property itself.

Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%?

Private mortgage insurance

Which of the following is a piece of specific data an appraiser may gather?

Property lot size BC; Specific data is related to the property. Lot size fits this bill.

Which of the following represents a characteristic of a title insurance policy?

Provides a title commitment BC; A title insurance policy provides the buyer with a title commitment.

What type of real estate investment is similar to collateralized mortgage obligations (CMOs)?

Real estate mortgage investment conduit BC; REMICs are similar to collateralized mortgage obligations.

Information shown in this area of the Uniform Residential Appraisal Report includes the conditions of the appraisal, the numbers for all of the values developed, and the final value decision made by the appraiser.

Reconciliation BC;This area of the URAR is the reconciliation. It's where the appraiser must enter the numbers for all of the values developed, the conditions of the appraisal, and the final value determination made by the appraiser.

This section of the URAR is used to record the comparisons for three comparable properties.

Sales comparison approach BC; The section of the URAR that is used to record the comparisons is the "sales comparison approach" section.

Roberta worked with an attorney to prepare her will. What kind of will is this?

Statutory BC; A will prepared by an attorney is called a statutory will.

Property managers spend a good deal of their time overseeing and managing others: maintenance people, staff, contractors, and sometimes even tenants. To be effective in this area, a property manager needs to have what type of skills?

Supervisory BC; Good supervisory skills are a must for property managers.

In investments, there are two types of depreciation, and each is defined by a particular event. Which of the following most accurately pairs the depreciation type with the event it is tied to?

Tax depreciation and cost recovery BC; Tax depreciation is tied to cost recovery.

Which of the following requires property managers and landlords to protect any sensitive personal information that they collect or maintain about their tenants from unlawful use or disclosure?

Texas's Identity Theft Enforcement and Protection Act BC; This is a requirement of Texas's Identity Theft Enforcement and Protection Act.

When is an estoppel certificate needed?

The buyer takes on the seller's current loan.

Which entity enforces subdivision covenants?

The civil court system BC; Covenants are enforced through the court system, if an an agreement can't be reached.

Appraiser Victor is determining the insured value of a property. What is he evaluating?

The cost to replace or rebuild a property BC; Insured value is the cost of replacing or rebuilding a property.

Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?

The covenant of warranty BC; The covenant of warranty assures that the grantor will warrant and defend the title against the lawful claims of others.

Which one of the following characteristics makes property taxes a reliable target for taxation?

They have a high compliance rate. BC; One characteristic that makes property taxes a reliable target for taxation is that they have a high compliance rate (that is, people tend to pay their property taxes). They are also hard to conceal, hold their value, and have low collection costs.

How many approaches to value do appraisers generally use?

Three - Appraisers use three approaches: sales comparison, cost to reproduce, and income.

Ensuring land is put to the use for which it is best suited while also protecting livability of a community and property values is achieved through ______.

Zoning

may appraise any property, regardless of difficulty or value.

certified general appraisers

evaluating comapables

using elements and units