Real estate

A group of investors bought property and developed a movie production studio. After a few years in business, the state passed regulations limiting the amount of tax incentives it would offer film studios shooting movies in the state. This move caused several companies to move their shooting to other states, jeopardizing the investors' ability to earn the return they were expecting. What type of risk is this?

Dynamic

Which of the following actions is representative of an agent's due diligence and ethical behavior?

An agent notices a discrepancy between what the homeowner says and what the property shows, so he investigates.

Which of the following is true about a sales contract in South Carolina?

Each change must be initialed by both parties.

Mortimer is selling his South Carolina home. Which of the following is true about the Wood Infestation Report?

Either Mortimer or the buyer may obtain the report within 30 days before closing.

If a South Carolina home is damaged by a fire prior to closing, what happens?

Either party may terminate, but must do so within five days of notice of the damage.

Al's buyer client, Wendell, is preparing an offer on a property. He wants to make sure his offer stands out above all others and is accepted, so he discusses waiving the inspection contingency. What should Al do?

Encourage the buyer to get an inspection, and if he still wants to waive it, put it in writing that he advised against waiving the inspection and have him sign it.

An investor is analyzing a property by looking at its ability to produce future income. The property is a 10-unit apartment building. Which of the following would be used to determine this value?

Gross income multiplier

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

In contrast to land that has buildings on it, vacant land is ______.

Harder to finance

Chester is moving on up! He and his wife are ready to sell their condo and purchase a new place. Chester is a real estate licensee and will list the property himself. What must Chester disclose to prospective buyers?

He owns the property.

Stan's local board of REALTORS® requires that disputes go to mediation first rather than arbitration. What does this mean for Stan?

He's obligated to abide by the requirement.

In what type of market is a buyer cautioned against asking for personal items?

Hot market

Paulo signed an open listing agreement with Debbie, his real estate agent. Which of the following statements is true?

If Paulo finds a buyer on his own, he doesn't owe anyone a commission.

Which of the following costs in a South Carolina purchase transaction is considered a buyer's transaction cost?

Appraisal cost

Maurice is meeting with a buyer who is also selling his current home. Which question should Maurice ask to pre-qualify the buyer?

Are you currently working with any other agents?

Which of the following is true regarding estate tax?

If your estate is worth less than a specific monetary threshold, the estate tax will not apply.

______ describes a unique characteristic of real property (differentiating it from other asset classes). Because of it, location plays a key role in value.

Immobility

Which of the following statements accurately represents a major difference between a pre-approval letter and a pre-qualification letter?

Buyers receive a pre-approval letter only after the lender has verified at least some information the buyer provided.

Physical possibility, financial feasibility, maximum profitability, and ______ are all considerations when determining highest and best use.

Legal permissibility

Which of the following are common with cold markets?

No or low offers

Which of these describes the method for determining the indicated value of a subject property when a licensee performs a market analysis?

Sales price of comparable ± adjustments

Which of the following factors should be considered when determining an acceptable sales price?

Seller's loan payoff amount

Changes in the national market may have little (or significantly delayed) impact on local markets. This is because the real estate market is ______.

Slow to respond

The Petersons are meeting with South Carolina licensee Amber for the first time. Which form must Amber present the Petersons with before entering into a brokerage relationship with them?

South Carolina Disclosure of Real Estate Brokerage Relationships form

In South Carolina, who has the legal right to choose the closing attorney for a real estate transaction?

The buyer

When performing a market analysis, to what are all adjustments made?

The sales price of the comparable properties

In a seller agency relationship, to which party does the licensee owe undivided loyalty?

The seller

REALTORS® protect and promote the interests of ______.

Their clients

Why should you ask potential buyer clients if they need to sell their home before purchasing a new one?

Their current home might be a potential listing for you.

Which of the following is true about net listings?

They often involve a conflict of interest.

Jasmine should include active listings in a market analysis for what important reason?

They show what the current competition is.

What's the purpose of the Non-Reliance clause in a South Carolina sales contract?

To affirm that only terms in the contract are being relied upon

What's the purpose of mediation?

To avoid litigation

What's the purpose of a sales contract?

To document the agreement between a buyer and seller in a real estate sales transaction

Buyers in this category want to purchase smaller homes, likely because their children have moved out or because their financial situation has changed. Many look for smaller properties that can offer the same quality of living as the property they're moving from.

Trade-down buyer

Butch and Meg listed their five-bedroom Colonial and are looking for a three-bedroom luxury townhome to buy. Now that their kids have grown and moved away, they don't need such a big house, but definitely want to be close to parks, major travel routes, and the local casino (Meg loves the slots). What buyer category most fits Butch and Meg?

Trade-down buyers

Danny and Sandy just had their second child. They live in a two-bedroom home and would like for their girls to each have their own room, so they're looking for a home with at least three bedrooms. What kind of buyers are they?

Trade-up buyers

______ rely on their knowledge from previous homebuying experiences. This experience helps them to identify what they're looking for in a new property, which is often more space or a newer home with a good location and extra living space.

Trade-up buyers

The preamble to the NAR Code of Ethics and Standards of Practice notes that it's in both REALTORS®' and consumers' best interest when REALTORS® ______.

Try to eliminate unfair business practices

Brendan's lender set him up with a loan in which the majority of Brendan's early payments go toward interest, his monthly payments remain the same, and he doesn't start paying much toward his principal until closer to the end of the loan. This is ______.

Typical amortization

Notice forms are ________, since they consist of one party giving notice of something to the other party.

Unilateral

Brandon wants to find out how many rental units are unoccupied in his area. Which market indicator provides this information?

Vacancy rates

What does "cash-on-cash return" mean?

A comparison of before-tax cash flow to cash invested

Vacant land is land that has no _______.

Buildings

Shelly's real estate investment strategy is to look for smaller multi-family properties, fix them up, and rent them out. Her investment strategy most closely matches which of the following?

Buy and hold

A comparison of before-tax cash flow to cash invested is known as ______.

Cash-on-cash return

What's stipulated in the Broker's Compensation section of a South Carolina sales contract?

Closing proceeds may be used to pay the brokers' commission.

Which type of business risk is uninsurable?

Dynamic

You meet a buyer who has an exclusive agency agreement with another firm. Which of the following questions can you ask the seller?

"When does your agreement with your broker expire?"

What's an income shelter?

A deductible allowance from net income

When a seller wants to expedite the closing process, what can a buyer offer to address this need?

A quick closing

A buyer has assembled quite a list of repairs he'd like the seller to make. The seller, fearing she might lose this buyer, agrees to every item on the list. In what type of market is this concern most valid?

Cold

Which of the following is a true statement about the Entire Agreement section of a South Carolina sales contract?

Illegal provisions in the contract may be separated from the contract without affecting the other provisions.

Fixers requiring major work may be eligible for ______________.

Rehabilitation loans

Under which of the following real estate submarkets would an investment in public storage facilities fall?

Special use

A change was made on page two of the South Carolina sales contract. Which of the following is a true and complete statement about where the parties must initial?

The parties must initial and date the change and initial the page.

Which of the following is an example of a cloud on a title?

A third party has staked a claim on a property

Cara, a licensee, is preparing a sales contract on behalf of her buyers. She finds that the contract doesn't quite meet all of her clients' needs. What should she do?

Add an addendum to the contract that meets her clients' needs.

Which buyer type would most likely be in the market for newly built home on an acre in the country?

Affluent

For what properties are wood infestation reports applicable in a South Carolina sales transaction?

All previously occupied residential homes

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

Amortized over the life of the loan

You're entering into an agreement with a client to help him look for a property to call his own. What type of contract will you use to identify your agency relationship's terms?

Buyer agency agreement

In South Carolina, unless the parties otherwise agree in the contract, the ______ is responsible for doing having the property surveyed prior to closing.

Buyer

Contacting homeowners to determine whether they or anyone they know is interested in selling describes the ______ approach to finding listings.

Cold calling

When finding listings, which statement describes the cold call approach?

Contacting homeowners to determine whether they or anyone they know is interested in selling

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

Contribution

What's the first step to handling an ethical dilemma?

Determine whether an ethical dilemma exists.

Connie tailors her marketing plan to each property she represents. This is because ______.

Different properties have different markets

Asking yourself who's involved in the ethical dilemma, how they're impacted, and what created the situation will help you get through which step for handling ethical dilemmas?

Evaluate the situation.

Not jumping to conclusions and considering the facts of the situation best describes which step for handling ethical dilemmas?

Evaluate the situation.

Which of these is a static risk?

Fire damaging the building

In South Carolina, how long must completed real estate forms be kept on file with the broker-in-charge?

Five years

Which of these would be considered a submarket within the investment strategy segment?

Fix and flip

Randolph is buying a property in South Carolina. His real estate broker told him he must have good funds for closing. What are good funds?

Funds that are immediately available for use

Lily is getting ready for an NAR ethics hearing. She should be prepared to ______.

Give a concise presentation

Sylvia's previous buyer clients filed an ethics complaint against her because she failed to tell them that the heating system in the home they bought wasn't up to code and needed to be redone. Sylvia recommended they hire an inspector before purchasing the property, but they'd declined. Sylvia ______.

Is probably not at fault, since agents aren't expected to have expert knowledge of heating systems

Which of the following describes a "buy and hold" investment strategy?

It's a more conservative investment method than a fix and flip.

What happens to a seller's flood insurance in a South Carolina sales transaction?

It's assigned to the buyer at closing.

Barry, a South Carolina real estate licensee, used the property's street address on the sales contract he helped prepare for his buyers. Why must he also include the property's legal description?

It's required for legal purposes.

Landon is the listing agent for Maury's property. Maury is moving out of state for a new job, so the house will be vacant for some time, depending on how long it takes to sell. Maury is pretty adamant about not having a sign in his yard, especially after he moves. Landon follows Maury's wishes, but a month after Maury moved, there hasn't been any movement on the property. Landon places a sign in the yard, hoping it will drum up some interest. Is this okay?

No, Landon shouldn't place a sign on Maury's property without Maury's written permission.

Clem, a licensee, told his buyers of a new construction property that they wouldn't have to worry about a home inspection. Is this correct?

No. New construction may have repair issues.

Brokerage fees, commissions, and service income are all examples of ______.

Non-trust funds

In states where they're legal, for which type of listing or listings may a net listing be used? Select the most complete answer.

Open, exclusive agency, or exclusive right-to-sell

In a hot market, what pricing strategy may incite bidding wars?

Pricing at or just below market value

At what point must a South Carolina licensee explain the types of brokerage relationships buyers may have with real estate professionals?

Prior to entering into a real estate transaction

Which of the following individuals agree to abide by the National Association of REALTORS® Code of Ethics?

REALTORS®

When solving word problems, which step should be done before you ever touch your calculator?

Reading

The houses in one neighborhood are all of similar sizes and style. When the Smiths' house goes into foreclosure, what principle will affect the value of the next-door neighbors' house if they sell at the same time?

Regression

As a buyer's agent, what can you do to help avoid closing issues?

Review the closing statement in advance.

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

Risk

Which of the following includes the required information in the Property section of a South Carolina sales contract?

Street address plus the legal description

What must a South Carolina real estate licensee who's purchasing a property disclose on the contract?

The buyer is a South Carolina real estate licensee.

A South Carolina sales contract contains an appraisal contingency. What happens when the property appraises at less than the agreed-upon sales price, and the seller refuses to lower the price?

The buyer may terminate and receive a refund of the earnest money.

What could potentially happen to the real estate industry if anyone could file a false NAR ethics complaint against a competitor at any time, without risk of punishment?

The industry would become full of suspicion.

A prospective buyer is curious why a previous owner is selling such a perfect home. The licensee knows that the previous owner recently died due to complications from AIDS. How should the licensee respond to the prospective buyer's inquiry?

The licensee can't disclose that a previous owner had HIV or AIDS.

Matt's buyer clients wanted to change a part of the sales contract, so Matt crossed out what was there and wrote in the preferred language. What else must happen?

The parties must initial and date the change.

What's market value?

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

Sophia, a REALTOR®, received an email about an agent in another firm. The email made fun of the agent's sales record and client dissatisfaction. It's pretty funny, so Sophia forwarded it to a few agents in her firm. Could she be found in violation of Article 15 of the NAR Code?

Yes, Sophia is responsible because she chose to forward the email, even though she didn't write it.

Denise is the listing agent on a property that's next to a lake. When advertising the property for sale, she describes it as "waterfront." Is this okay?

Yes, the house sits next to the lake.

When preparing a comparative market analysis, or CMA, on what should you base your analysis?

You should base it on the specific competitive market for the subject property.