Real Estate Practice test 68%

In any city, town, or village, which department oversees physical and socioeconomic matters impacting the community as a whole? Office of Conservation and Wetlands Planning Department Tax Assessor Town Engineer

Planning department

For farmers and others who live in rural communities, a ______ loan may be available. One benefit of these loans is the option for a longer payback period. Farm-to-closing-table Fresh farmers Organic producers Rural development

rural development

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan? $250,000.00 $30,640.65 $367,687.80 $735,375.60

$367,687.80

How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction? - The assessment amount is split evenly between the buyer and seller and is paid on the day of closing. - The buyer is responsible for all taxes accrued in the year of purchase, and will pay the tax bill when due. - The tax bill will be prorated to the day of closing. - Typically, the seller pays the full assessed tax for the year on the day of closing.

- The tax bill will be prorated to the day of closing. Prepaid taxes are one of the items prorated to the day of closing.

Which of the following is a typical accrued adjustment? -Heating oil in the tank -Prepaid taxes -Unpaid real estate taxes -Utilities billed and paid in advance

-unpaid real estate taxes Accrued expenses are those that the seller owes at the day of closing but that the buyer will eventually pay, such as unpaid real estate taxes.

What percentage of a VA loan is guaranteed? 10% 100% 25% 80%

25% The VA guarantees a maximum of 25% of the home loan amount up to $104,250. This would equal a mortgage amount of $417,000 with no down payment.

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee? $3,200 $3,600 $4,000 $800

3,200

A property has 10 units and is 90% occupied. Rent is $500 per month. Total vacancy and collection loss equals 10%. What's the potential gross income? $4,500 $5,000 $54,000 $60,000

60,000 Potential gross income is the income the property would realize if it were fully rented. 10 units x $500 = $5,000 per month x 12 months = $60,000.

Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.) 79% 81% 83% 85%

81%

What percentage of a worker's income must come from production in order for the worker to qualify as an independent contractor? 50 51 75 90

90 The actual number is nearly all—at least 90% of a worker's income must come from production to qualify for independent contractor status.

For which property would a mansion tax apply? - A condominium or cooperative with a sales price of $1 million - A condo with 3,000 square feet with a sales price of $950,000 - A duplex values at $500,000 - A property of 5,000 square feet or more

A condominium or cooperative with a sales price of $1 million Size is not a factor in the mansion tax; it applies to properties with sales prices above $1 million.

An installment sales contract is also known as _______. - A contract for deed - A mortgage contract - A provisional contract - A residential purchase contract

A contract for a deed An installment sales contract, also known as an installment land contract or a contract for deed, allows the buyer to pay the seller for the property over time.

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this? Acceleration Alienation Defeasance Due-on-sale

Acceleration

The property manager's primary responsibility to an owner is to ______. - Achieve the highest possible return on the owner's investment - Achieve the lowest possible vacancy rate - Provide all required reports - Supervise maintenance and repair tasks

Achieve the highest possible return on the owner's investment All of these are property manager responsibilities, but the primary duty is to achieve the highest possible return on the owner's investment based on that owner's goals.

Which of the following is an example of the duty of reasonable skill and care? Advising clients to seek expert advice on matters outside of your expertise Carrying out a client's instructions without question Keeping a client's confidential information confidential Sending the client daily email updates on all that is happening with the transaction

Advising clients to seek expert advice on matters outside of your expertise The duty of reasonable skill and care requires agents to operate within the scope of their expertise and advise clients to seek expert advice on matters that are outside of the agent's expertise.

Demographics impact the housing market. Which of the following is a true statement? - An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes. - An increase in the number of retirees in a given population would positively impact the demand for large, single-family homes. - An influx of higher wage earners to a given area would create a price decrease for lower-valued homes. - An influx of higher wage earners to a given area would decrease the demand for higher-priced housing.

An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes. Downsizing retirees usually look for smaller homes or condos.

Under ARELLO guidelines, which of the following is an example of passive solicitation? - Broker Ben converses with a prospective client in an online chat room. - Broker Ben purchases an online banner ad to promote his practice. - Broker Ben sends an email to a prospective client. - Broker Ben texts a prospective client.

Broker Ben purchases an online banner ad to promote his practice.

Why has buyer representation increased since the late 1980s? - Buyers have become more aware of who works for whom. -Buyers organized and advocated for it. -It's due to lawsuits over misrepresentation. -It's required by law.

Buyers have become more aware of who works for whom

If, after seeing your carefully prepared comparative market analysis, a seller doesn't agree with the price range you prepared in your listing presentation, your best practice would be to ______. - Decline the listing if the seller's price and your price analysis are too far apart - List the property at the seller's price and hope to reduce the price later - Offer to purchase the property at the list price you think is best if it doesn't sell at the seller's price - Split the difference

Decline the listing if the seller's price and your price analysis are too far apart It's best not to waste everyone's time. The most professional thing you can do in this situation is to decline the listing.

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? Capital Dynamic Environmental Static

Dynamic

The three companies that track credit for lenders are TransUnion, Equifax, and Experian. Which of the following is a true statement? - Each company a uses a slightly different scoring system -Each company posts the borrower's FICO® Score - Scoring is consistent across the three companies - The higher the score, the higher the credit risk

Each company a uses a slightly different scoring system The system used by each credit bureau varies.

What happens during an abatement period? - Existing properties are charged a higher amount on the total improved value. - Existing properties are charged the usual property tax on the property's pre-improvement value only. - New properties pay a higher property tax rate during the abatement period. - Rates rise at a uniform level, not to exceed an additional 25% in property taxes owed.

Existing properties are charged the usual property tax on the property's pre-improvement value only. One outcome of a tax abatement is that existing properties will pay property tax only on pre-improvement value. Any increase in the assessed value is temporarily halted.

Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have? Graduated lease Gross lease Net lease Percentage lease

Gross lease

Which is the most widely used policy, recommended by lenders, which covers a home for all risks of physical loss except listed exclusions, and covers loss of contents for many of the same perils. Homeowners 1 (HO-1) Homeowners 3 (HO-3) Homeowners 4 (HO-4) Homeowners 6 (HO-6)

HO-3

Which of the following tasks would require a New York real estate license? -Assemble closing documents -Calculate a commission check -Host an open house -Place a for sale sign in a front yard

Host an open house Administrative tasks are fine, but anything that involves activities normally performed by a licensee (such as meeting with the public to show real estate) would require a license.

Government regulation of a property that deprives the landowner of the economic value of the property without compensation from the government is called ______. - Condemnation - Eminent domain - Escheat - Inverse condemnation

Inverse condemnation Inverse condemnation occurs when government takes private property, either physically or by the effect of regulation on the property value, without offering the owner just compensation as is required by eminent domain.

In a title theory state, which of the following is a true statement? - A promissory note creates a lien against the property used as security for the loan. -It's generally much easier for a lender to foreclose on a property. -The lien makes non-judicial foreclosure typical. -The mortgage creates a lien against the property used as security for the loan.

It's generally much easier for a lender to foreclose on a property. In a title theory state, the lender holds the legal title to the property (usually through a third-party trustee) until the loan is paid off. This makes it easier for the lender to foreclose.

Which of the following is true about a PITI mortgage? -It provides lower interest rates than most other kinds of mortgages. -It's financed by the seller. -Its monthly payments go toward principal, interest, taxes, and insurance. -The whole payment goes to the interest until it's paid off, and then the payment is applied to the principal.

Its monthly payments go toward principal, interest, taxes, and insurance.

What are the hurdles that most often delay or prevent closings? - Buyer and seller disagreements, commissions, and contingency issues - Inspection issues, paperwork, and recording problems - Loans and appraisals, titles, and home inspections - Titles, commission, and lending problems

Loans and appraisals, titles, and home inspections Closings are most often delayed or prevented by loans and appraisals, titles, and home inspections. One of the ways of ensuring transactions stay on track is to use a checklist.

What's one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties? Accounting Disclosure Loyalty Obedience

Loyalty

Which of these situations is an example of designated (appointed) agency? - Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction. - Marvel's broker at Homeworks Realty appoints her as the buyer's agent in a transaction. Tim's broker at Great Homes Real Estate appoints him as the seller's broker in the same transaction. - Meredith's broker appoints her to represent both the buyer and the seller in a single transaction. - Michele is the firm's managing broker. She's the designated dual agent in all dual agency transactions.

Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction. In a dual agency situation, designated agency means the firm's broker assumes the role of the dual agent and designates one of the firm's licensees to represent the buyer and a different licensee to represent the seller, keeping the transaction in house.

Mariel is buying a home and is looking forward to the tax deductions. She may deduct which of the following? Closing costs Furnishings purchased on credit Loan origination fee Utility costs

Loan Origination fee

If a taxpayer who has a business in their home or who uses a portion of their home for their business wants a deduction on their income tax, they should _____________. -File schedule HO -Keep track of the water and utility bills; these can be written off totally when there is a home office - Multiply $5 against the square footage of the home used for business purposes -Obtain references from three individuals who can attest to the home office being used soley as a home office

Multiply $5 against the square footage of the home used for business purposes A $5 deduction per square foot applies up to 300 SF. Alternatively, the taxpayer can Itemize certain expenses for the home, such as utilities, garbage, water, and then multiply those expenses by the percentage of the home used for business purposes.

Which of the following is a charge you would pay to your lender to arrange the financing for your home loan? -Document fee -Lender usury fee -Origination fee -Transfer fee

Origination fee

In New York, there are two primary approaches for contract preparation that depend upon the _______. Brokerage Loan Property location Property size

Property Location

Which of the following parties is required to complete a signed Property Condition Disclosure form? - Buyer's broker - Listing broker - Property buyer - Property seller

Property Seller The purpose of the Property Condition Disclosure form is to convey to the buyer what is known by the seller about the property's condition.

Which of the following is part of an electrical heating system? - A/C vent - Blower - Register - Resister

Resister A resister is part of an electrical heating system.

Your investor client has made a low offer on a property, but so far there's been no response. She doesn't want to offer on another property yet because she doesn't have enough cash on hand to purchase two properties at the same time. What's the best way way to avoid this situation in the future? - Ask your client to offer something closer to the list price. -Avoid getting too hopeful about each offer. - Explain to sellers that they can always rent back from the buyer. - Set an expiration date for the offer.

Set an expiration date for the offer

Licensee Ernie is working with his seller client Bertha, an elderly but spry woman. Bertha loves to chat about her garden, her grandchildren, and her neighbors—topics that Ernie doesn't find very interesting. What should Ernie do to best serve his seller client? - Consistently steer Bertha back to the subject that's important, selling her house. - Have his assistant contact Bertha whenever it's needed so Ernie can spend his time more productively. - Prepare good excuses for cutting their meetings short so they can focus only on what matters. - Stay customer-focused and try to understand Bertha's model of the world.

Stay customer-focused and try to understand Bertha's model of the world. Thee best way for Ernie to serve any client is to understand that client's needs and perception of the world. This is how he can work successfully with Bertha or any other client.

Who is obligated to inform sellers that they need to complete a signed Property Condition Disclosure form? The buyers The licensee representing the buyers The licensee representing the sellers The property inspector

The Licensee representing the sellers

Who or what entity has legal title to a financed property in a lien theory state? - The beneficiary - The borrower - The lender - The state

The borrower

For real estate agents and brokers working in downstate New York, what is common practice while preparing a sales contract? - The buyer's agent completes a pre-printed purchase offer or contract of sale, which is not subject to review by an attorney. - The buyer's agent prepares a binder, memorandum of sale, or receipt of sale that specifies the essential terms of the transaction. - The buyer's agent prepares a binder, memorandum of sale, or receipt of sale that specifies the essential terms of the transaction, then forwards it to the seller's attorney, who prepares the actual contract. - The buyer's agent writes a purchase offer or contract of sale.

The buyer's agent prepares a binder, memorandum of sale, or receipt of sale that specifies the essential terms of the transaction, then forwards it to the seller's attorney, who prepares the actual contract.

Which of these is an example of an agent NOT executing the duty of reasonable skill and care? - Kevin, Corinne's buyer agent, helped her write her offer and reviewed it to make sure it was what she wanted before presenting it to the seller's agent. - Marta agreed to list a commercial property even though her expertise is in residential real estate. - Morgan is careful to protect and manage all his client's earnest money deposits. - Rex promptly submits all offers to his seller client.

The duty of reasonable skill and care requires licensees to exercise caution, practice within the scope of their expertise, and provide an expert level of client representation. Marta isn't able to offer this level of service for a commercial property. Marta agreed to list a commercial property even though her expertise is in residential real estate.

Women didn't have protection under fair housing laws until sex was added to the list of protected classes when ______ passed. - Fair Housing Amendments of 1988 - The Civil Rights Act of 1866 - The Fair Housing Act of 1968 - The Housing and Community Development Act of 1974

The housing and community development act of 1974 Sex wasn't added as a protected class until 1974 with the Housing and Community Development Act.

What is financial risk? - The risk that an investor cannot secure financing at an affordable rate -The risk that is directly related to leverage -The risk that the property has a bad location -The risk that the required return on investor capital will not be met

The risk that is directly related to leverage The more money an investor leverages (or borrows), the greater the financial risk.

Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates? -To assess the adequacy of tenant income screening processes -To assess your ability to manage tenant relations -To determine if rental rates are too high compared to your competitors' rates -To forecast the amount of effort that will be required to collect the late rents

To assess the adequacy of tenant income screening processes If rental delinquency rates are increasing, it may be necessary to implement stricter income requirements and screening processing.

Which of the following is the process the lender uses to evaluate whether to make the loan? Application Appraisal Commitment Underwriting

Underwriting

When you use a comparative market analysis to calculate a suggested listing price range for a particular property, which of the following actions will you take? Adjust prices from all properties listed or sold within a one-mile radius of the subject property. Calculate price range based on data from expired listings and pending sales. Use adjusted prices from comparables and refine a range using active listings, expired listings, and possibly pending listings. Use the prices of sold comparables and active listings, adjusted for time listed.

Use adjusted prices from comparables and refine a range using active listings, expired listings, and possibly pending listings. Although having information on all of these will assist in determining where in a price range an appropriate list price would be, only recent sales of comparables should be used to calculate the price range for the CMA.

When must a cooperative Board of Directors reveal their reasons for rejecting a potential buyer? - After the interview - During the interview -Never; boards may make decisions without divulging why - When a complaint is filed with NYC's Human Rights Commission

When a complaint is filed with NYC's Human Rights Commission

Which of the following is a true statement regarding working with buyers? - Assisting buyers is typically a very short-term prospect. -It's important to work with all buyers, whether or not they're currently ready to buy. -They will always buy from you if you put in effort for them. - You should pre-qualify buyers before deciding to work with them.

You should pre-qualify buyers before deciding to work with them. Working with buyers can be time-consuming and, without an agency agreement in place, they may not be loyal. They also may not be prepared to buy. Asking questions up front can help determine whether a buyer is worth your time.

Rhonda is an unrepresented buyer who's purchasing Tony's townhome. Gary represents Tony in the sale of his property. What's Rhonda's relationship to Gary? A client and fiduciary A customer A customer and client A fiduciary

a Customer

Hannah, who would like to obtain a broker license, is not a U.S. citizen. Assuming she meets all the other requirements, she can earn a broker license if she ________. - is a permanent U.S. resident - provides three written references from former clients - spends at least one month annually in the U.S. - spends at least two weeks annually in the U.S.

is a permanent U.S. resident

Margaret isn't ready to buy Jill's property, but she pays Jill a fee that guarantees she'll be notified if another buyer appears. If another buyer does make an offer, Margaret has the opportunity to purchase at the price and terms of the offer. Margaret has a(n) ______ on Jill's property. Installment contract Lease with an option to buy Purchase and sale agreement Right of first refusal

right of first refusal

Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______. - An environmental impact statement - A SEQRA document - A TDR document - A zoning ordinance

zoning ordinance