Real Estate Final Exam
The penalty for knowingly or willfully violating the federal lead-based paint disclosure rules can be: A:10-year prison sentence B:$11,000 fine and imprisoned for up to one year, or both C:prison up to one year only D:$11,000 fine only
$11,000 fine and imprisoned for up to one year, or both Explanation Penalties for knowingly or willfully violating the federal lead-based paint disclosure rules can be up to $11,000 for each violation and imprisonment for up to one year, or both.
A property is listed for $225,000 and is selling for $219,000. The seller is paying a 5% commission and $500 in points for the buyer. After paying these costs, what will the seller net? A:$213,750 B:$207,550 C:$213,250 D:$208,050
$207,550 Explanation $219,000 selling price x .05 commission rate = $10,950. $219,000 - $10,950 = $208,050. $208,050 - $500 points = $207,550 net.
A seller accepts an offer for $91,575 with a $10,000 mortgage carried by the seller for the buyer. After adjustments between the parties were made on the closing statement, the buyer ended up owing the seller $78,500 in cash on closing day. What was the amount of transfer tax paid by the seller? A:$274.80 B:$235.50 C:$274.72 D:$244.80
$274.80 Explanation $91,600 x .003 = $274.80.
Shoreland zoning regulates land located within: A:300 feet of a man-made rain garden B:300 feet of a private, man-made lake C:1,000 feet of the ordinary high water mark of a lake, pond, or flowage D:1,000 feet of ordinary high water mark of a river or a stream
1,000 feet of the ordinary high water mark of a lake, pond, or flowage Explanation The DNR defines the Shoreland zone as land located 1,000 feet of the ordinary high water mark of a lake, pond, or flowage; within 300 feet of ordinary high water mark of a river or a stream; the landward side of the floodplain, whichever is greater.
A tenant has vacated a property at the end of the tenant's lease term. What is the landlord's deadline for returning a security deposit less any amounts properly withheld? A:21 days after the tenant gives notice that the tenant is moving out B:28 days after the tenant gives notice that the tenant is moving out C:21 days after the tenant vacates the unit D:10 days after the tenant vacates the unit
21 days after the tenant vacates the unit Explanation A landlord must return the security deposit within 21 days of the tenant vacating the unit if the tenant vacates at the end of the tenant's lease term.
The extension portion of the WB-1 Residential Listing Contract can be found on lines: A:205-219 B:220-224 C:151-158 D:159-166
220-224 Explanation This is the area of the listing contract that describes how the firm's listing contract is extended for a period of one year for protected buyers.
How long does a licensee have to notify the DSPS of a misdemeanor conviction? A:48 days B:10 days C:48 hours D:24 hours
48 hours Explanation A license who is convicted of a misdemeanor or a felony must notify the DSPS of the conviction within 48 hours of the conviction.
What document does a seller use to convey ownership of personal property to a buyer? A:An evidence of ownership B:A bill of sale C:A warranty deed D:An abstract of title
A bill of sale Explanation A bill of sale is used to transfer ownership of personal property from one party to the new owner. You can think of a bill of sale as the "deed" for personal property. Ownership of real estate is transferred using a deed and ownership of personal property is transferred using a bill of sale.
Which of the following situations requires a written earnest money disbursement agreement prior to disbursement of funds when the earnest money is held by the listing firm? A:A party makes a counter-offer not acceptable to the other party B:A buyer is not able to obtain financing C:The seller has not accepted the offer and the offer has expired D:The seller rejects the offer
A buyer is not able to obtain financing Explanation The listing firm cannot do anything with the earnest money for 60 days after the scheduled closing date unless the parties reach a written agreement for the disbursement of the earnest money. The listing firm may wish to write a memorandum or letter to the buyer and seller and their respective attorneys, if any, pointing out lines 71-81 of the WB-11 Residential Offer to Purchase and explaining that this is how the earnest money disbursement must be handled.
According to the terms of the WB-1 Residential Listing Contract which of the following could be a protected buyer? A:A buyer who called the listing firm for the number of bedrooms B:A buyer who attended an individual showing C:A buyer who attended an open house D:A buyer who looked at the property on the MLS
A buyer who attended an individual showing
Which of the following real estate licensee is NOT required to ensure compliance with the federal LBP disclosure law? A:A buyer's firm paid by the buyer B:A selling licensee paid by the selling firm C:A listing firm paid by the seller D:A selling firm receiving a commission from a cooperating firm
A buyer's firm paid by the buyer Explanation Under the federal LBP law, an agent means any party who enters into a contract with a seller or lessor including any party who enters into a contract with a representative of the seller or lessor, for selling or leasing target housing. This term does not apply to purchasers or any purchaser's representative who receives all compensation from the purchaser.
Which of the following would a licensee have to disclose to all parties in the transaction? A:A seller is paying an incentive to a buyer at closing B:A buyer's licensee is representing the licensee's sister in the purchase of a property C:Receiving a referral fee from another licensee for the referral of a listing D:A buyer's firm is receiving commission from the buyer
A buyer's licensee is representing the licensee's sister in the purchase of a property Explanation A license acting as an agent in a real estate or business opportunity transaction may not act in the transaction on behalf of the licensee's immediate family without the prior written consent of all parties to the transaction. The buyer's licensee is an agent representing in this case a family member; therefore, they must disclose this interest.
Which of the following creates a multiple representation relationship? A:A buyer's licensee writes an offer for a buyer on a property listed by the buyer's licensee's firm B:A listing licensee writes an offer for a buyer on one of the listing licensee's listings C:A buyer's licensee presents an offer to a seller D:A listing licensee presents a counter-offer to a buyer
A buyer's licensee writes an offer for a buyer on a property listed by the buyer's licensee's firm Explanation Multiple representation occurs when a firm has an agency contract with both the buyer and the seller in the real estate transaction. The phrase "a buyer's licensee" tells us that the buyer has an agency agreement with the firm. "A property listed with the buyer's licensee's firm" tells us that the seller also has a listing contract with that firm. The buyer's licensee's firm has an agreement with both the buyer and the seller.
Which of the following is NOT viewed as an encumbrance that must be disclosed to a buyer? A:A recorded right of first refusal B:A neighbor's encroaching fence C:Back taxes that the seller will be paying off at closing D:A recorded easement
Back taxes that the seller will be paying off at closing Explanation Any encumbrances that are going to be removed at closing do not need to be disclosed. This would commonly include taxes, mortgage loans, and other liens that will be paid off at closing with the seller's proceeds.
According to the terms of the WB-1 Residential Listing Contract, how many days does the seller have to provide a new listing firm with the former listing firm's list of protected buyers? A:Seven days B:Five days C:Ten days D:One week
Seven days Explanation According to the terms of the WB-1 Residential Listing Contract, the seller has seven days to provide the new listing firm a list of the protected buyers.
Which type of loan does the federal government guarantee? A:Department of Veterans Affairs (VA) loan B:Federal Housing Administration loan (FHA) C:Conventional loan D:Adjustable rate mortgage
Department of Veterans Affairs (VA) loan Explanation The guarantee feature on a VA loan promises lenders that in the event of deficiency in a foreclosure the lender will be compensated by the VA for any losses incurred in the foreclosure and subsequent sale of the property up to the limit of the guarantee.
Which of the following form of asbestos is likely to be considered the largest health risk? A:Deteriorating asbestos insulation wrapped around water pipes B:Asbestos floor tiles that have been covered by new vinyl flooring C:Asbestos insulation that was friable and has been encapsulated D:Asbestos shingles found underneath fiberglass shingles
Deteriorating asbestos insulation wrapped around water pipes Explanation The deteriorating asbestos is most likely going to be friable and would be the largest health risk. Asbestos, which has been covered or encapsulated so that the fibers cannot become airborne, would be considered the safest.
Which of the following is NOT a duty owed to a customer? A:Disclosure of material facts B:Confidentiality C:Reasonable skill and care D:Acting in an honest and fair manner
Disclosure of material facts Explanation The requirement to disclose material facts only applies to a client. A licensee must disclose material adverse facts to all parties in the transaction.
When presenting an offer to a For Sale by Owner (FSBO), a buyer's licensee will present what form to the seller? A:The WB-1 Residential Listing Contract B:The WB-36 Buyer Agency Agreement C:Disclosure to Clients D:Disclosure to Customers
Disclosure to Customers Explanation When a buyer's licensee is presenting the buyer-client's offer to a FSBO, the buyer's licensee should present a Disclosure to Customers form to the FSBO owner.
What kind of agency relationship is created when a seller signs a listing contract and prohibits the firm from representing the buyer too? A:Multiple representation B:General agency C:Implied agency D:Express agency
Express agency Explanation A listing contract creates an express, special agency relationship because it is in writing and it allows the listing agent to represent the seller in one specific transaction.
A licensee is selling the licensee's own house. What must the licensee do? A:List it with a different form B:Advertise it in the local paper C:Inform all prospective purchasers that the licensee is the owner and is a licensed real estate agent D:Pay the selling agent the going market rate of commission
Inform all prospective purchasers that the licensee is the owner and is a licensed real estate agent Explanation Wis. Admin. Code § REEB 24.05(5): A licensee acting as a principal in a real estate or business opportunity transaction shall disclose his, her, or its license status and intent to act in the transaction as a principal at the earliest of all of the following: 1. The first contact with the other party or an agent representing the other party where information regarding the other party or the transaction is being exchanged. 2. A showing of the property. 3. Any other negotiation with the seller or the listing firm.
When a depository institution remits the interest earned on a firm's interest-bearing trust account to the Department they must inform the firm of all the following EXCEPT the: A:Service charges on the account B:Account balance C:Interest earned on the account D:Rate of interest applied to the account
Interest earned on the account Explanation Wis. Stat. § 452.13(2)(e)(1) When a depository institution remits interest to the Department they must furnish to the firm maintaining the interest-bearing trust account the rate of interest applied, the amount of service charges or fees deducted, if any, and the account balance for the period that the statement covers. The firm does not receive information on the interest that was actually paid.
Susan decides to make an offer to purchase Brian's home. Susan has a buyer agency agreement with Nick. Nick writes the offer to purchase and takes it over to Brian's home personally. Nick learns that Brian is at Mike's house so Nick goes to Mike's house to deliver the offer to Brian. Brian is not at Mike's. Nick hands the Offer to Purchase to Mike and asks him to give the Offer to Brian. For the delivery to Mike to be considered effective delivery under the terms of the offer, on what line of the WB-11 Residential Offer to Purchase would Mike's name need to be stated? A:Line 566 B:Line 567 C:Line 557 D:Line 558
Line 557 Explanation Line 557 of the WB-11 Residential Offer to Purchase reads, "Name of Seller's recipient for delivery, if any___________________."
Which of the following is NOT a penalty for a licensee who breaches a duty to a client? A:Rescission of the contract B:Forfeiture of commission C:Loss of MLS membership D:Disciplinary action under real estate license law
Loss of MLS membership Explanation The remedies for breach include loss of commission, rescission, and the client's ability to sue for damages. The REEB may order disciplinary action against the licensee as well.
What form would be used to allow a seller to negotiate with more than one buyer at the same time? A:Counter-Offer B:Multiple Counter-Proposal C:Amendment to Offer to Purchase D:Notice Relating to Offer to Purchase
Multiple Counter-Proposal Explanation The multiple counter-proposal allows a seller to negotiate with several buyers at one time by issuing a non-binding proposal to each buyer. If the buyer accepts the seller's multiple counter-proposal, it becomes an offer from the buyer to the seller that can be accepted by the seller, thus creating a binding sales contract.
How should a licensee number counter-offers? A:Number the form according to how many counters have been made by that party B:Show the date of the Counter-Offer in the blank provided in the upper right hand corner C:Identify the form ID number assigned to that particular Counter-Offer form D:Number the form according to how many counters have been made in total by buyer and seller
Number the form according to how many counters have been made in total by buyer and seller Explanation WB-44 Counter-Offer, note at the top of the form.
A property protected under the WB-36 Buyer Agency Agreement Extension of Agreement Term is protected for how long after the expiration of the contract? A:Two years B:Six months C:One year D:18 months
One year Explanation Lines 252-257 Extension of the Agreement Term of the WB-36 Buyer Agency Agreement provides, "The Agreement term is extended for a period of one year as to any property The Agreement term is extended for a period of one year as to any Protected Property under this Agreement.
If there is a rented fixture in a home that is listed and a buyer wishes to write an offer, a licensee should: A:assume it is included B:ignore it C:not address it in the offer because then the seller must include it D:address it in the offer to purchase
address it in the offer to purchase Explanation Rental fixtures are a common problem. Proper precautions by a licensee would be to address the rented fixture in the offer to purchase. It is not proper to ignore the rented fixture; it is not automatically included and is not automatically property of the agent.
All of the following are true regarding discount points EXCEPT: A:they increase a lender's profit B:discount points vary according to the specific loan program C:they are paid to the lender to make up for the difference between the market rate of a loan and the origination rate of a loan D:all loans have discount points associated with them
all loans have discount points associated with them Explanation Not all lenders offer discount points to borrowers.
A firm is allowed to act in a multiple representation relationship when: A:the buyer consents to multiple representation in the buyer agency agreement B:the seller agrees to multiple representation in the listing contract C:the offer to purchase is drafted by the Agent of Buyer and Seller D:both clients in the transaction consent in writing to the multiple representation
both clients in the transaction consent in writing to the multiple representation Explanation Wis. Stat. § 452.135(1) No firm may provide brokerage services to more than one client in a transaction without an agency agreement with each client and a written consent to multiple representation.
The Bump Clause time frame does not begin to run until the: A:buyer's actual receipt of the notice B:notice has been dropped into the buyer's agent's overnight box C:notice has been sent by mail to buyer D:notice has been delivered by fax to buyer
buyer's actual receipt of the notice Explanation Please refer to lines 336 - 337 of the WB-11 Residential Offer to Purchase.
"Use a form" means to: A:complete a form by filling in the blanks to accomplish the intent of a party B:present it to a party C:take advantage of the form D:reproduce a form
complete a form by filling in the blanks to accomplish the intent of a party Explanation Wis. Admin. Code § REEB 16.02(5): Use a form means to complete a contractual or conveyance form by filling in the blanks or modifying printed provisions on a form for the purpose of accomplishing the instruction of a party in a specific real estate transaction.
Changing the zoning from residential to scenic reserve would be an example of: A:buffer zoning B:bulk zoning C:spot zoning D:downzoning
downzoning Explanation Changing zoning from residential to scenic reserve is a change in zoning from a more active to a less active classification.
The right held by utility company to install a gas line across another's property is likely a(an): A:lien B:easement C:judgment D:encroachment
easement Explanation An easement is the right held by one party to make use of the land of another for a limited purpose. Utility easements are common on privately held property.
A licensee is required to do all of the following EXCEPT: A:be knowledgeable regarding laws, public policies, and current market conditions on real estate matters B:protect the public against fraud, misrepresentation, and unethical practices C:have the technical knowledge, skills, or training possessed by competent third-party inspectors and investigators of real estate and related areas D:assist, guide, and advise the buying or selling public
have the technical knowledge, skills, or training possessed by competent third-party inspectors and investigators of real estate and related areas Explanation Licensees are not required to have the technical knowledge, skills, or training possessed by competent third-party inspectors and investigators of real estate and related areas.
When acting as a buyer's agent, a license must disclose buyer agency to all parties or risk a claim of: A:misrepresentation B:Fair Housing violations C:RESPA violations D:HUD violations
misrepresentation Explanation Failing to disclose an agency relationship with a buyer could lead to a claim of misrepresentation against a license if the seller or listing firm thought the licensee was acting as a selling firm.
The written document that is buyer's promise to repay the loan is the: A:promissory note B:acceleration clause C:defeasance clause D:mortgage
promissory note Explanation The mortgage creates the lien against the property. The defeasance clause requires the lender to remove their lien from the borrower's property upon repayment of the loan. The acceleration clause gives the lender the right to accelerate the entire loan balance due upon default of the loan. The promissory note is the borrower's promise to repay the debt.
A buyer receives an inspection report that discloses defects as defined by the inspection contingency. Under what circumstances will buyer NOT be able to give a Notice of Defects? A:The defects existed when seller bought the house. B:The defects can be readily cured by seller. C:The buyer had knowledge of the defects at the time of the offer. D:The seller was not aware of the defects.
The buyer had knowledge of the defects at the time of the offer. Explanation WB-11 Residential Offer to Purchase lines 210-211.
Which of the following is NOT true regarding a licensee who associates with a new firm? A:The licensee must notify the DSPS of the transfer within 10 days of the transfer. B:The licensee must pay a fee with the transfer form. C:The licensee cannot provide real estate services for the new firm until at least 30 days have passed since the transfer was mailed. D:The licensee may not practice real estate until the transfer application is mailed to the DSPS or delivered in person to the DSPS.
The licensee cannot provide real estate services for the new firm until at least 30 days have passed since the transfer was mailed. Explanation A licensee who is associated with a firm may notify the department that the licensee has become associated with another firm using the DSPS form and sending it to the DSPS with $10.
Rental property is sold to a new owner. Tenants remain under a written lease. The new owner wants to raise the rent. When can the new owner raise the rent? A:Within 24 hours after the closing B:Before closing, as long as it is no more than $25 C:When the lease with the current tenants expires D:At the closing
When the lease with the current tenants expires Explanation Unless the terms of the tenants' current lease permit an increase in rent, the new owner must wait until the lease expires and execute a new lease at the desired rent.
If a licensee is asked about the existence of any known sex offenders in the area, to achieve immunity from having to disclose this information, the licensee may: A:provide the Department of Corrections' contact information in writing B:ask the seller to interview neighbors to find out if they are sex offenders C:never have immunity from such disclosures D:ignore the question
provide the Department of Corrections' contact information in writing
The existing firms in town have decided not to work with a new firm that charges less commission. This is likely: A:Commission structuring B:a group boycott C:MLS policy D:price-fixing
a group boycott Explanation A group boycott is competitors conspiring against another business or agreeing to withhold their patronage to limit competition.
The Statute of Frauds applies to all the following real estate transactions EXCEPT: A:a listing contract B:an offer to purchase C:an option to purchase D:a lease for less than one year
a lease for less than one year Explanation A lease for less than one year can be an oral contract. A court would consider it enforceable against both parties.
A radioactive gas in the air that comes from the natural breakdown of uranium in soil, rock and water is: A:methamphetamine B:radium C:radon D:mold
Radon Explanation: Radon is a gas that comes from the natural (radioactive) breakdown of uranium in soil, rock, and water and gets into the air.
A seller is selling a condominium. What must accompany the seller's real estate condition report? A:A condominium addendum to the real estate condition report B:Floor plans of neighboring condominium units C:A copy of meeting minutes from the last three association meetings D:The names and phone numbers of units on either side of the seller's unit
A condominium addendum to the real estate condition report Explanation A seller of a condominium must provide a real estate condition report accompanied by an addendum to the condition report and an executive summary.
Which of the following sales would need to include a lead-based paint addendum to the Offer to Purchase? A:Housing for the elderly built prior to 1978 B:An efficiency apartment without bedrooms built prior to 1978 C:Housing for persons with a disabling condition built prior to 1978 D:A duplex built prior to 1978
A duplex built prior to 1978 Explanation The LBP disclosure addendum is required on all transactions involving target housing. Target housing includes any housing built prior to 1978 except for housing for the elderly or persons with disabilities and 0-bedroom dwellings.
Which of the following statements is INCORRECT regarding a licensee's duty to inspect real estate? A:A selling agent is also required to inspect a property prior to or during the showing of the property. B:A licensee must conduct a reasonably competent and diligent inspection of accessible areas of a structure and immediately surrounding areas of the property to detect observable, material adverse facts. C:A licensee cannot write an offer for a buyer without attending a showing. D:A licensee, prior to listing a property, shall make inquiries of the seller on the condition of the structure, mechanical systems and other relevant aspects of the property as applicable.
A licensee cannot write an offer for a buyer without attending a showing. Explanation A licensee, when engaging in real estate practice that involves real estate improved with a structure, shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts. While it may not be advisable, it is not illegal for a licensee to write an offer for a buyer without attending a showing. A buyer may have already seen the property or perhaps is willing to write an offer sight unseen. The real challenge for a licensee in drafting an offer without seeing a property is knowing what contingencies to include.
A licensee is going to list a property improved with a structure. Which of the following statements best describes a licensee's inspection duties? A:A licensee does not have an inspection obligation. B:A licensee needs to complete a reasonably competent and diligent inspection to detect observable, material facts. C:A licensee needs to complete a reasonably competent and diligent inspection only if requested by the parties. D:A licensee needs to complete a reasonably competent and diligent inspection to detect observable, material adverse facts.
A licensee needs to complete a reasonably competent and diligent inspection to detect observable, material adverse facts. Explanation Wis. Admin. Code § REEB 24.07(1) A licensee, when engaging in real estate practice involves real estate improved with a structure shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts.
When would a licensee NOT have to provide agency disclosure? A:A selling licensee is negotiating an offer to purchase with a buyer B:A listing licensee answers a prospective buyer's basic questions at an open house C:A property manager negotiating a lease with a tenant D:A listing licensee is showing a commercial listing to a buyer
A listing licensee answers a prospective buyer's basic questions at an open house Explanation Agency disclosure to a client needs to occur either prior to entering into an agency agreement with the client. Agency disclosure to a customer must occur prior to negotiations. Holding an open house and answering a buyer's basic questions does not automatically constitute brokerage services. If the conversation went into more detail where a buyer was starting to discuss the terms under which the buyer would purchase the property, then an agency disclosure would need to be given.
Which of the following would be a fair housing violation in Wisconsin? A:A property owner charging more money to a tenant with children than to a tenant without children B:A firm refusing to list a property because the sellers insist on listing the property for $25,000 more than the firm's estimated of selling price C:A lender charging different terms based only on the criteria of age in the granting of credit D:A builder building homes designed specifically for the elderly
A property owner charging more money to a tenant with children than to a tenant without children Explanation Wis. Stat. § 106.50(1): It is the declared policy of this state that all persons shall have an equal opportunity for housing regardless of sex, race, color, sexual orientation, disability, religion, national origin, marital status, family status, lawful source of income, age or ancestry. Wis. Stat. § 106.50(2)(5m): Nothing in this section prohibits discrimination based on age or family status with respect to housing for older persons. Wis. Stat. § 106.50(2)(5m)(b): Nothing in this section shall prohibit a person from exacting different or more stringent terms or condition for financing housing based on the age of the individual applicant for financing if the terms or conditions are reasonably related to the individual applicant.
What is a planned unit development? A:A development where single family homes are owned as condominiums B:A process for a government to take private property for a public development C:A regulatory process which promotes unified development for a development specially approved by the zoning authority for the developer D:A regulatory framework for protecting land near bodies of navigable water
A regulatory process which promotes unified development for a development specially approved by the zoning authority for the developer Explanation A planned unit development (PUD) is a regulatory process which promotes large scale, unified land development by means of mid-range, realistic programs in chase of physically curable, social and economic deficiencies in land and cityscapes. A developer seeking to create a PUD must obtain approval for the relevant land use and zoning authorities.
What term describes a debt secured by an item of personal property? A:A bill of sale B:A deed C:A real estate mortgage D:A security interest
A security interest Explanation A security interest is an interest a creditor holds in an item of personal property when the debt is secured by that item of personal property. A lender may have a security interest in a car, a tractor, machinery, or restaurant equipment for example. A security interest is also know as a chattel mortgage though security interest is the more common term.
Which of the following transactions must include a real estate condition report? A:A seller selling a duplex that the seller has never lived in B:A transfer of property where the transfer is exempt from the transfer fee C:New construction that has never been inhabited D:A personal representative selling property that the personal representative has never lived in
A seller selling a duplex that the seller has never lived in Explanation According to Wis. Stat. Chapter § 709 transactions involving the following properties are exempt from the real estate condition report requirements: property that has not been inhabited; transfers exempt from the Wisconsin transfer fee; transfers by personal representative, trustees, conservators, fiduciaries who are appointed by, or subject to the supervision by the court as long as the person has never occupied the property.
What must firms provide to their licensees? A:Training for how to develop and grow a real estate business B:A written statement of procedures under which the firm and licensees associated with the firm shall operate with respect to transaction documents C:An arbitration manual for alternative dispute resolution D:Onsite supervising during normal business hours
A written statement of procedures under which the firm and licensees associated with the firm shall operate with respect to transaction documents Explanation A firm must provide licensees associated with the firm with a written statement of procedures under which the firm and licensees associated with the firm shall operate with respect to handling documents relating to a real estate transaction.
When comparing an appraisal to a market analysis which of the following is most correct? A:A market analysis takes value into consideration B:A market analysis is an objective opinion of value C:An appraisal determines value D:An appraisal justifies value by using past events
An appraisal justifies value by using past events Explanation An appraiser is trained to provide an unbiased estimate of value. The appraiser will justify the value of the real estate by looking at past events such as what have buyers paid for this type of property in the past.
A licensee offers payment for a buyer's home inspection. What is this offer from the licensee to the buyer called? A:An incentive B:Commission C:Fee-splitting D:A referral
An incentive Explanation Wisconsin allows incentives to be offered to buyers and sellers directly provided they are documented properly prior to closing. Such incentives may be offered in any amount in order to induce the buyers and sellers to purchase or sell.
Which of the following is NOT automatically marital property? A:A spouse's boat acquired after marriage B:Income from a 4-unit purchased after the marriage C:A spouse's income D:Appreciation from a duplex owned by one spouse that was purchased by that person prior to marriage
Appreciation from a duplex owned by one spouse that was purchased by that person prior to marriage Explanation Wis. Stat. § 766.31(7)(c): Property acquired by a spouse during marriage is individual property if acquired from appreciation of the spouse's individual property.
What section in the WB-1 Residential Listing Contract requires licensees to disclose commission offered to cooperating firms? A:Compensation to others B:Extension of listing C:Marketing D:Commission
Compensation to others Explanation Lines 52-53 of the WB-1 listing contract require the firm to disclose the commission offered to a cooperating firm.
Which of the following general warranty deed covenants guarantees the grantee's physical possession of the property will not be disturbed by former owners? A:Covenant against encumbrances B:Covenant of warranty forever C:Covenant of seisin D:Covenant of quiet enjoyment
Covenant of quiet enjoyment Explanation The definition of quiet enjoyment is the right to have uninterrupted use of the property without interference from former owners or tenants.
Which of the following statements best describes the function of the VA guarantee, FHA mortgage insurance, and conventional private mortgage insurance? A:If the lender forecloses, the lender is protected to some degree against potential loss. B:If the homeowner gets into financial difficulty, this coverage will make the monthly mortgage payment. C:If the homeowner dies, the remaining mortgage will be paid off. D:If the property declines in value, the buyer is guaranteed he will not suffer an equity loss.
If the lender forecloses, the lender is protected to some degree against potential loss. Explanation The VA guarantee, the FHA mortgage insurance and private mortgage insurance all protect the lender's risk when making a mortgage loan.
A selling agent has given the buyer information on the real estate market and suggested a purchase price for the buyer's offer. The selling agent has likely created what type of agency with the buyer? A:General B:Implied C:Single D:Express
Implied Explanation By treating the buyer like a client, the selling licensee has likely created an implied agency agreement and possibly undisclosed multiple representation.
How must a supervising broker delegate supervision to another broker? A:With a notarized Delegation of Supervision statement from the Department of Safety and Professional Services B:By email C:The delegating broker must transfer all ownership in the company to the receiving broker D:In a written statement signed by both brokers
In a written statement signed by both brokers Explanation A firm can delegate supervision responsibility in writing as long as the delegation is signed by both the broker/firm delegating and the recipient of the delegated authority.
A seller accepts an offer for $175,000. Two weeks before closing a tornado causes $5,000 in damage to the property. What must the seller do? A:Notify the buyer in writing B:Repair the defect C:Allow the buyer to rescind the offer D:Amend the real estate condition report and deliver a copy to the buyer
Notify the buyer in writing Explanation If a property is damaged after an offer is accepted, the language in the offer specifies what will occur. Lines 468-471: "If, prior to closing, the Property is damaged in an amount not more than five percent of the purchase price, other than normal wear and tear, Seller shall promptly notify Buyer in writing, and will be obligated to restore the Property to materially the same condition it was in at the date on line 1 of this Offer."
What must a firm provide to its licensees? A:Reasonable access to a supervising broker B:Legal assistance in transactions C:Business cards D:Copies of the approved forms
Reasonable access to a supervising broker Explanation A firm must provide its licensees with access to a supervising broker. The access must be reasonable and can be via phone, email, text, or other means if suitable.
What is the legal effect of a counter-offer? A:Activation of the bump clause B:Rejection of the offer and presentation of a new offer C:Cancellation of an existing contract D:Modification of the terms of an existing offer
Rejection of the offer and presentation of a new offer Explanation A counter-offer is a rejection of an offer and presentation of a new offer.
Which of the following tests would NOT be used to determine if a hot tub is a fixture or personal property? A:Adaptation of the article B:Intent of the parties C:Method of attachment D:Relationship between the parties
Relationship between the parties Explanation The four tests a court will use to determine a property's classification are how is it attached, how is it adapted, what was the party's intent, and any agreement between the parties regarding the item.
A seller lists a house with Salesperson A. A buyer attends Salesperson A's open house and decides to write an offer after signing a buyer agency agreement with Salesperson A. Which of the following correctly identifies the relationship between the buyer, the seller, and Salesperson A? A:Salesperson A has a single agency relationship with the seller. B:Salesperson A has a single agency relationship with the buyer. C:Salesperson A has a multiple representation relationship. D:Salesperson A has created an illegal relationship with the seller and the buyer.
Salesperson A has a multiple representation relationship. Explanation The buyer and the seller each have a signed agency agreement with Salesperson A, thus creating a multiple representation relationship.
Which of the following activities can an unlicensed personal assistant do? A:Attend showings B:Schedule appointments C:Conduct an open house D:Complete an offer for a buyer
Schedule appointments Explanation An unlicensed personal assistant cannot do any activities that would require a real estate license such as showings, open houses, or completing forms. An unlicensed assistant can complete activities that do not require a license such as scheduling appointments.
What state agency owns the interest earned on a firm's Interest Bearing Real Estate Trust Account (IBRETA)? A:The Department of Financial Institutions B:The Department of Administration C:The Department of Safety and Professional Services D:The Department of Agriculture, Trade and Consumer Protection
The Department of Administration Explanation Interest earned from a firm's IBRETA account belongs to the Department of Administration.
Which of the following is a CORRECT statement regarding Antitrust Laws? A:A conspiracy exists whenever a competing company acts according to an independent business decision. B:The Sherman Antitrust Act was designed to maintain and preserve business competition. C:When a company changes its commission structure the process should not be documented. D:A conspiracy to restrain trade occurs when a firm independently decides to offer only buyer agency.
The Sherman Antitrust Act was designed to maintain and preserve business competition. Explanation The Sherman Antitrust Act was designed to maintain and preserve business competition.
According to the Truth in Lending Act (TILA), what should be disclosed to a borrower? A:The name of the property insurance company that the borrower must use B:Financial statements of the mortgage company C:All liens and encumbrances on the property D:The annual percentage rate (APR)
The annual percentage rate (APR) Explanation The primary disclosures required under the Truth in Lending Act (TILA) are the financing charges, the annual percentage rate, the total amount financed, and total payments that will be made.
A buyer has selected multiple representation without designated agency. A seller has selected multiple representation with designated agency. The buyer wants to buy that seller's house. Which of the following is true? A:The seller's licensee can tell the seller that the buyer has been pre-approved for far more than the list price. B:The buyer's licensee can tell the buyer that the property is overpriced. C:The firm must assign a designated agent for the seller and a designated agent for the buyer. D:The firm and all of its licensees must remain neutral.
The firm and all of its licensees must remain neutral. Explanation If one party selects multiple representation with designated agency and the other party selects multiple representation without designated agency, the agency choices do not match. That means the firm and all its licensees must remain neutral.
A buyer wants to have the interest earned on their earnest money deposit. Which of the following statements is most correct? A:The firm cannot draft an escrow agreement for the buyer and seller. B:The firm can give the interest to the buyer if the offer to purchase states that the buyer gets the interest. C:The firm can give the interest to the buyer with written permission from the seller. D:The firm cannot hold the earnest money but they may draft an escrow agreement for the buyer and the seller
The firm cannot draft an escrow agreement for the buyer and seller. Explanation Wis. Admin. Code § REEB 18.06 If the parties to a transaction do not desire that the firm hold the earnest money in the firm's real estate trust account, and wish to designate an escrow agent other than the firm, the firm may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney. The firm may not hold the funds in the firm's real estate trust account, nor may the firm act in any way as custodian of the funds for the parties. The funds, pursuant to the escrow agreement, shall be held by some other party, such as a bank, a savings and loan association, a credit union, or an attorney.
Which of the following is CORRECT regarding a property owner who holds a real estate license? A:The property owner may place security deposits into a real estate trust account. B:The property may automatically place security deposits into their personal account. C:The property owner must pay interest on the security deposit equal to the standard interest rate paid at a federal reserve member bank. D:The property owner may spend the security deposits as long as they have the money available at the end of the lease.
The property owner may place security deposits into a real estate trust account. Explanation Wis. Admin. Code § REEB 18.031 A licensee having an ownership interest in a rental property shall either place security deposits related to that property in a real estate trust account or shall provide in a lease for security deposits to be held in an account maintained in the name of the owner or owners.
A seller lists his house with Salesperson A. A buyer goes to Salesperson A's open house and decides to make an offer on the house. The buyer signs a buyer agency agreement with Salesperson A. Salesperson A drafts the offer to purchase for the buyer. Which of the following CORRECTLY identifies the relationship of Salesperson A and the buyer and the seller? A:The seller is Salesperson A's client, the buyer is Salesperson A's customer B:The seller is Salesperson A's customer, the buyer is Salesperson A's client C:The seller is Salesperson A's client, the buyer is Salesperson A's client D:The seller is Salesperson A's customer, the buyer is Salesperson A's customer
The seller is Salesperson A's client, the buyer is Salesperson A's client Explanation Salesperson A has a listing contract with the seller and a buyer agency agreement with the buyer. Both the seller and buyer are clients of Salesperson A.
Which of the following is specific to the WB-4 Condominium Listing Contract? A:The agency disclosure provisions are incorporated into the contract. B:The seller needs to indicate the date they completed the real estate condition report. C:The seller needs to indicate whether the sale is subject to a right of first refusal. D:The seller needs to address the property that is included and excluded in the sale.
The seller needs to indicate whether the sale is subject to a right of first refusal. Explanation The WB-4 provides an area for the seller to indicate whether the condominium association has a right of first refusal on the unit.
The financing commitment contingency would be satisfied if which of the following were to occur? A:The seller receives a loan commitment from buyer along with a notice of unacceptability B:The seller receives a loan commitment subject to conditions C:The buyer's agent receives a loan commitment from the buyer's lender D:The buyer receives a loan commitment from lender
The seller receives a loan commitment subject to conditions Explanation Lines 270-280 of the WB-11 Residential Offer to Purchase If Buyer qualifies for the loan described in this Offer or another loan acceptable to Buyer, Buyer agrees to deliver to Seller a copy of a written loan commitment. This contingency shall be satisfied if, after Buyer's review, Buyer delivers to Seller a copy of a written loan commitment (even if subject to conditions) that is: (1) signed by Buyer; or (2) accompanied by Buyer's written direction for delivery. Delivery of a loan commitment by Buyer's lender or delivery accompanied by a notice of unacceptability shall not satisfy this contingency. CAUTION: The delivered loan commitment may contain conditions Buyer must yet satisfy to obligate the lender to provide the loan. Buyer understands delivery of a loan commitment removes the Financing Commitment Contingency from the Offer and shifts the risk to Buyer if the loan is not funded.
What would a buyer's licensee NOT have to disclose to the buyer-client? A:The sellers are getting divorced and need to sell the house quickly. B:There are negotiation strategies that may benefit the buyer more than the seller. C:There is a leak in the basement. D:The property the buyer is interested in purchasing will be difficult to sell in the future.
The sellers are getting divorced and need to sell the house quickly. Explanation The sellers' divorce is the sellers' confidential information and cannot be disclosed to the buyer.
Which of the following MUST a licensee disclose to a party in a transaction? A:There is a community-based residential facility containing teenage males next door B:A murder took place on the property C:There have been improvements made to the property without proper building permits D:The third-party inspection report received by the parties, disclosed that there were significant problems with the basement foundation
There have been improvements made to the property without proper building permits Explanation Wis. Stat. § 452.23(2) A licensee is not required to disclose any of the following to any person in connection with the sale, exchange, purchase or rental of real property; 1) That the property was the site of a specific act or occurrence, if the act or occurrence had no effect on the physical condition of the property; 2) information relating to the physical condition of the property or any other information relating to the real estate transaction, if a written report that discloses the information has been prepared by a qualified third party and provided to the person; 3) the location of any adult family home, community based residential facility, or nursing home in relation to the location of the property.
A purchaser drafts their WB-14 Residential Condominium Offer to Purchase with an inspection contingency. According to the WB-14 the home inspector will be inspecting the? A:Limited common elements and common elements B:Unit and limited common elements C:Unit only D:Unit and common elements
Unit and limited common elements Explanation Lines 324-326 of the WB-14 Residential Condominium Offer to Purchase: "This Offer is contingent upon a Wisconsin registered of Wisconsin licensed home inspector performing a home inspection of the Unit and the Limited Common Elements that may be used only by the owner of the Condominium Unit being transferred after the date on line 1 of this Offer that discloses no defects."
Which of the following does the Department of Natural Resources (DNR) describe as providing critical habitat for wildlife, water storage to prevent flooding and protect water quality, and recreational opportunities for wildlife watchers, anglers, hunters and trappers and boaters? A:Piers B:Wetlands C:Shorelands D:Water frontage
Wetlands Explanation The DNR describes wetlands as providing critical habitat for wildlife, water storage to prevent flooding and protect water quality and recreational opportunities for wildlife watchers, anglers, hunters and trappers and boaters.
At what point in the real estate transaction does a buyer receive equitable title? A:When the offer is accepted B:When all contingencies have been removed C:When binding acceptance occurs D:At closing
When all contingencies have been removed Explanation Equitable title is the right to obtain absolute ownership to property when legal title is held in another's name. A buyer obtains equitable title after all contingencies have been removed and they are ready to consummate the transaction.
Title insurance does NOT insure over: A:facts disclosed by survey B:forged documents C:defects found in public records D:incorrect marital statements
defects found in public records Explanation The grantee was already aware of the defect before the transfer of title and the grantee had the ability to discover the defect prior to the purchase of the property.
Housing that meets the Fair Housing Act's definition of "housing for older persons" may legally exclude: A:families without children where all members are over the age of 65 B:families with children C:an unmarried couple where both parties are over the age of 62 D:individuals over the age of 62
families with children Explanation If housing meets the Fair Housing Act's definition of "housing for older persons," then it may legally exclude families with children.
A licensee is required to disclose: A:that the property was the site of a specific act or occurrence, if the act or occurrence had no effect on the physical condition of the property or any structures located on the property B:the location of any adult family home, community-based residential facility, or nursing home in relation to the property C:material inconsistent with or materially contradictory to the seller's statements or the inspection report of a third party D:the information disclosed on third party inspection reports
material inconsistent with or materially contradictory to the seller's statements or the inspection report of a third party Explanation Wis. Admin. Code § REEB 24.07(6): If a licensee's reasonably and diligent inspection reveals facts materially inconsistent with or materially contradictory to the seller's statements or the inspection or investigation report of a third party, the inconsistency shall be disclosed in writing and in a timely manner to the parties.
If the buyer would like the buyer's firm to be paid by the seller, the buyer: A:should authorize the payment of commission from seller to buyer's firm in the Offer to Purchase B:must authorize the payment of commission from seller to buyer's firm in the buyer agency agreement C:must request the direct payment of commission from the listing firm to buyer's firm in the Offer to Purchase D:should refuse to pay the buyer's firm's feel unless the buyer's firm agrees to sue the seller for the compensation
must authorize the payment of commission from seller to buyer's firm in the buyer agency agreement Explanation A client must give permission for the client's firm to receive payment from somebody other than the client. The buyer agency authorizes the buyer's firm to seek commission from the seller or the listing agent. Through this default provision, the buyer authorizes the seller or listing firm to pay the buyer's firm. See lines 50-53 of the WB-36 Buyer Agency/Tenant Representation Agreement.
The listing contract states that the washer and dryer are included in the sale. The offer to purchase does not mention the washer and dryer anywhere. At the time of closing the washer and dryer: A:are included in the sale B:must be removed C:must be on the property D:will be purchased separately
must be removed Explanation Lines 482-486 of the WB-11 Residential Offer to Purchase state "At time of Buyer's occupancy, Property shall be in broom swept condition and free of all debris, refuse, and personal property belonging to current tenants, or that sold to Buyer or left with Buyer's consent." The offer to purchase determines what property is included or excluded in the transaction. Since the washer are dryer are personal property if they are not addressed in the offer to purchase they must be removed at closing.
When renting commercial property to tenants, the property owner or property manager: A:needs to be aware of any local equal opportunity ordinances that may affect commercial or industrial properties B:must take into consideration the Federal Fair Housing Laws C:if licensed, must use the state-approved commercial lease form D:must disclose knowledge of lead-based paint to potential tenants under the lead based paint disclosure law
needs to be aware of any local equal opportunity ordinances that may affect commercial or industrial properties Explanation Federal fair housing laws do not apply to commercial property. Lead-based paint disclosure is only applicable to target housing, which is housing built before 1978. Wisconsin does not have approved leases for commercial or residential property. Licensees must follow local fair housing or equal opportunity laws and those might apply to commercial properties.
All of the following would constitute a basis for disciplinary action under Wisconsin's license law EXCEPT: A:the listing firm advertising a property with the consent of the seller after the listing contract has expired B:paying a referral fee to another licensee without disclosing the fee C:attempting to represent both buyer and seller without their written consent D:the listing agent accepting a bonus from the buyer
paying a referral fee to another licensee without disclosing the fee Explanation Representing both the buyer and the seller without written consent is a violation of duties of licensees. Licensees can pay referral fees to other licensees without disclosure. A listing agent can only accept payment from the listing agent's firm. Advertising a property without the seller's consent is a violation of Wis. Admin. Code Ch. REEB 24.
A lender is in the practice of restricting the number of loans or the loan-to-value ratio in certain areas of a community. This is a violation of fair housing law and is called: A:steering B:discounting C:blockbusting D:redlining
redlining Explanation Redlining is restricting the number of loans or the loan-to-value ratio in certain areas of a community. The decisions on whether or not to issue a loan or a homeowners insurance policy must be made on the creditworthiness of the individual not the location of the property.
Discount points enable a borrower to: A:reduce the term of the loan B:buy a house with less money down C:reduce the principal of the loan D:reduce the initial interest rate of the loan
reduce the initial interest rate of the loan Explanation The buy down provisions on a loan allow the borrower to pay points. The borrower purchases points to originate a loan at a lower than market interest rate.
In the WB-1 Residential Listing Contract, a seller does NOT agree to: A:reimburse the listing firm for all advertising if the property does not sell B:provide accurate information required in connection with the sale C:make the property available for showings D:allow a lockbox on the property
reimburse the listing firm for all advertising if the property does not sell Explanation The listing contract does not require the seller to compensate the listing firm for any advertising.
If, after receiving an offer from a prospective buyer, the seller makes a counter-offer, the prospective buyer is: A:bound by the original offer B:relieved of further liability if the seller releases the buyer C:bound by the counter-offer D:relieved of further liability
relieved of further liability Explanation A counter-offer is a rejection of a previous offer. The parties of a rejected offer are no longer bound by the original offer.
A selling licensee can receive a commission from the: A:selling firm B:seller C:buyer D:buyer's firm
selling firm Explanation Wis. Stat. § 452.14(3)(f) Disciplinary proceedings shall be conducted by the board if it finds that a licensee accepted from any person except the firm with which the licensee is associated, if the licensee is associated with a firm, a commission or valuable consideration for the performance of any act specified in this chapter or as compensation for referring a person to another licensee or to any other person in connection with a transaction.
A salesperson may practice real estate for: A:the firm with which the licensee is associated B:multiple firms as long as each firm is aware of the other firms C:any seller who is willing to sign a listing contract D:only one seller at a time
the firm with which the licensee is associated Explanation Wis. Stat. § 452.30(7) A salesperson may be associated with only one firm at a given time. (b) A salesperson may not engage in independent real estate practice and may engage in real estate practice only when associated with a firm.
A listing licensee and a subagent have a responsibility to the seller under: A:the Statute of Frauds B:MLS rules and regulations C:local customs D:the law of agency
the law of agency Explanation The law of agency specifies the duties between a client and an agent. Listing and subagents agents represent the seller. Buyer agents represent the buyer.
Jimmy and Sara, a married couple, are selling their primary residence. Both Jimmy and Sara must sign all of the following EXCEPT: A:the offer to purchase B:any amendments to the offer C:any deed transferring title D:the listing contract
the listing contract Explanation The listing contract, unlike the other contracts, does not require the signature of both spouses in order to be valid. The courts have held that the party signing the contract is responsible for the commission. If only Jimmy signs the listing contract, Jimmy is stating that he alone is responsible for the commission.
A purchaser of real estate is entering into a land contract with the seller. The purchaser should expect legal title when: A:the seller has been paid in full B:the land contract is recorded in public records C:the buyer takes possession of the property D:making the first land contract payment to the seller
the seller has been paid in full Explanation A land contract is different from other types of financing in that legal title does not pass to the buyer during the term of the land contract. Legal title passes only when the seller is paid in full.
When purchasing the property, the owners disclosed that they received permission from the local municipality to build their deck onto the setback lines. This is an example of a: A:nonconforming use B:variance C:conditional use D:permitted use
variance Explanation A variance grants permission to deviate from a zoning restriction.
From the grantee's point of view, the best deed to receive is a: A:deed in lieu of foreclosure B:warranty deed C:personal representative's deed D:quitclaim deed
warranty deed Explanation The general warranty deed offers the most comprehensive guarantee of title. The grantor makes five promises to the grantee. They are the covenants of seisin, against encumbrances, further assurance, quiet enjoyment, and warranty forever.