Test
A property closed for $210,000, and the seller made a 20% profit. How much had the seller paid for the property, assuming he/she did nothing to the property? A $175,000 (Dollars) B $252,000 (Dollars) C $168,000 (Dollars) D $162,500 (Dollars)
$210,000 / 1.20 = $175,000
owner of a retail complex is most likely to use what type of lease? A A net lease B percentage lease C A ground lease D A graduated lease
B A percentage lease is most commonly associated with • retail tenants. A net lease is commonly used by office tenants.
If the client dies, what happens to the contract between the client and agent? A The contract is automatically terminated B The contract will remain open С The contract becomes voidable D The contract is executed
A Death automatically terminates the contract and the agent is released of their obligations under the contract. The agents cannot receive a commission in this case.
Which of the following is true regarding liquidated damages? A Earnest money is often considered liquidated damages B You need to justify a loss to collect liquidated damages C Liquidated damages don't apply to a real estate contract D Liquidated damages are fixed by law
A Earnest money is often considered liquidated damages in a real estate sales contract. If the buyer defaults on the contract, the seller is most likely entitled to the buyer's earnest money.
How long does a listing agent need to let the seller know about any additional offers he/she receives from other prospective buyers? A Until the closing B Until all the contingencies are removed C Until the seller has accepted one offer D Until the seller says so
A Even after a seller accepts an offer from a buyer and enters into a contract, the listing agent is still obligated to present all additional offers to the seller. The seller cannot enter into a contract with any w new prospective buyers; however, if the current buyer withdraws from the contract Cor can't close on the contract), the buyer may look to the other offers they received.
A seller and buyer just signed the sales contract. The sales contract is considered... A Executory B Executed C Pending D Void
A Once a contract is signed by both parties, it is considered executory. Once the contract is fully performed, it is considered executed.
At the sale of the property, the deed simply states that the grantor has the right to convey ownership but does not include any warranties. This type of deed is called a/an...? A Bargain and sale deed B Special warranty deed C General warranty deed D Full warranty deed
A The bargain and sale deed is when the grantor limits • him/herself to saying they have the right to convey and makes no guaranties.
When renting a property, which of the following are exempt from the Fair Housing Act? A Houses with four or fewer units and the owner lives in one of the units B Multi-family properties with five or more units C Any property where the owner does not live on the premises D No property is exempt from the Fair Housing Act
A There are only a few exemptions to the Fair Housing Act. These include dwellings with four or fewer units in which the owner lives in one of the units, and single family homes sold or rented without the use of a broker and the owner does not own more than three of such single-family homes.
Which of the following would be covered by title insurance? A An unrecorded deed B A recorded lien С A known easement D An encroachment highlighted on the survey
A Title insurance covers against defects to the title that were not known, including an unrecorded deed.
The seller received a good offer from a prospective buyer. However, the seller wants to extend the closing date by a few days. The seller updates the closing date on the buyer's offer, signs the offer, and returns it to the buyer. What has occurred? A The seller is presenting a counteroffer to the buyer, which terminates the original offer B The buyer does not have to sign off on this change since it does not alter their offer price С The seller cannot change a term of the offer D Once the seller signed off on the change, and delivered it to the buyer, a valid contract was created
A Since one of the terms of the buyer's offer was changed, this essentially becomes a counteroffer by the seller. The seller and buyer do not have a valid contract until all of the terms of the offer are accepted in-writing by both parties.
Which is true regarding dual agency? A. Loyalty is compromised B. There are no fiduciary obligations anymore C. Both clients receive full fiduciary obligations D. Confidentiality does not apply anymore
A. In a dual agency, the fiduciary obligations are reduced and loyalty is compromised, but confidentiality will remain.
A borrower is looking at various loan options. He sees that fixed rate loans have a higher interest rate than the ARM loans; however, interest rates are expected to go up in the near future. If the borrower plans on selling the house within three years, which loan option is best? A. A fixed ARM for 3 year would be a good option B. A fixed rate loan is safer in this case C. A one year ARM presents no risk D. ARMs should never be considered
A. In a 3 year fixed ARM, the payments would stay fixed for the first 3 years, and adjusted afterwards. But the borrower would pay off the loan by then when he sells the property. Since the fixed ARM has a lower interest rate, it will be the best option for the borrower.
A listing agreement is an example of alan...? A Express and written agreement B Express and oral agreement С Oral and implied agreement D A general agreement
A. The listing agreement must be • in-writing, which makes it an express agreement.
If a salesperson lists their own house for sale, which of the following is true? A. It is not a conflict of interest B It is a conflict of interest and needs to be disclosed С It is a conflict of interest and illegal D It is a conflict of interest, but you can go ahead without doing anything in particular
B It is a conflict of interest and •needs to be disclosed to the buyer.
A seller entered into a contract with a buyer. However, prior to closing, the seller decides they no longer want to sell the property. If the seller terminates the contract, what has occurred? A The buyer is in breach of contract B This is a breach of contract and the buyer can sue for specific performance C The contract is considered executed and both parties are released of their obligations D The contract is legally voided
B The seller cannot back out of the sales contract, unless the buyer mutually agrees to terminate the contract. Otherwise, the seller is in • breach of contract. The buyer may sue for specific performance, meaning the seller must follow through with their contract obligations.
Regarding the use of technology, which of the following applies? A Online advertising does not have to follow the same rules as print B Data security is a concern С A broker's obligation of confidentiality does not apply to the use of social media D Required disclosures do not apply if the broker conducts their business online
B When marketing a property online, data security is a top priority.
When the agent only represent one client, which is the best description of the relationship? A.Transaction broker B. Single agency C. Dual agency D. Preferred agency
B. In a single agency, the agent •only represents one side of the transaction.
When borrowing money for the purchase of real estate, the borrower...? A. Receives a note B. Is referred to as the mortgagor Is referred to as the mortgagee D. Has no legal obligations
B. The borrower is the mortgagor and gives a note (a contract with legal obligations) to the lender for the receipt of money.
A prospective buyer can expect the following duties from a listing agent, except.....? A Accounting B Honesty C Loyalty D Basic competence
C A prospective buyer is considered a customer to the listing agent. The seller is the client of the listing agent. Loyalty is only owed to the client, not the customer. The remaining answer choices are owed to both the client and the customer.
In a listing contract, the agent agrees to market and sell the seller's property in exchange for a commission. This is an example of....? A Consent B Good business decision C Consideration D Payment of services
C All valid contracts must have consideration. Consideration is "something of value", which is usually money. In a sales contract, consideration is the money the buyer is willing to pay for the property. In a listing contract, consideration is seller's agreement to pay the agent a commission.
A bank owned property is also know as a/an... ? A short sale B foreclosure С REO D deed in lieu
C An REO is a bank owned property, obtained either through a foreclosure or a deed in lieu.
A new provision needs to be added to an existing real estate sales contract. This is called a/an...? A Modification B Amendment C Addendum D Addition
C If the buyer of seller needs to add something new to the contract, an addendum is used. A change to the contract will require an amendment.
Some of the closing costs on a $300,000 transaction are as follows: Commission of $15,000, title insurance fee of $5,000, mortgage pay-off of $245,000. Based on that information, what is the seller's proceed of sale? A $35,000 (Dollars) B $30,000 (Dollars) С $40,000 (Dollars) D $45,000 (Dollars)
C Proceed of sale is $300,000 - $245,000 - $15,000 = $40,000. • The $5,000 title insurance fee is paid by the buyer, not the seller.
Which of the following is most likely to be true when a seller signs a listing agreement with a broker? A The broker is a universal agent B The broker is a subagent С The broker is a special agent D The broker is a general agent
C. A listing agreement typically creates a special agency relationship between the broker and seller. A property management agreement typically creates a general agency relationship between a broker and landlord.
When does the buyer obtain a mortgage commitment? A. After the underwriting process B. After the first conversation with the mortgage broker С. After the appraisal of the property D. After the review of their credit history
C. The mortgage commitment can only be obtained after the buyer has secured a property and it has been appraised.
A deed is used for which of the following? A Confirming ownership B To have a record C Transfer ownership from the grantee to the grantor D Transfer ownership from the grantor to the grantee
D A deed is the legal document • that is used to transfer ownership of a property.
Which of the following best applies to an ora contract? A Execute B Voidable С Void D Unenforceable
D An oral contract is still a valid contract but difficult to prove. Therefore, oral contracts are potentially unenforceable.
A, B and C own property as a joint tenant. If C dies, what happens? A C's heirs receive a third interest in the property B The probate courts need to decide who receives the property С A and B now automatically own the property as tenants in common, each with 50% interest D A and B now automatically own the property as joint tenants, each with 50% interest
D Because they have a joint tenancy, the right of survivorship says that the other co-owners will automatically inherit C's interest and they will have equal interest.
A property is set to close on January 15th. The quarterly tax bill (for January through March)| for the property is $600, and is due on February 1st. Which of the following will occur at closing? A The seller will owe $500 B The buyer is responsible for $100 С The buyer will receive $500 from the seller D The buyer will receive $100 from the seller at the closing
D $600 for the quarter is $200 per month, and $100 for 1/2 month. The seller owes Jan 1-15, which is 1/2 a month or $100. The buyer is responsible for the rest ($500). The seller has to pay the buyer $100 at the closing.
A seller wants to hire a broker to sell their property; however, they want to reserve the right to not pay a commission if they find the buyer themselves. The seller should enter into which type of listing agreement? A Net listing B Open listing С Exclusive right to sell listing D Exclusive agency listing
D. An Exclusive Agency Agreement gives the seller the right to not pay a commission if they find the buyer themselves. An Exclusive •Right to Sell Agreement gives the agent more protection, and requires the seller to pay the agent a commission, regardless of who finds the buyer for the property.
Which of the following is associateo with the cost of a oan? A. Down payment B. PMI C. MIP D. Interest
D. The interest paid on the loan is the profit to the lender and is the additional amount the borrower has to pay for the right to use the money.
An agent lists a property for sale. A prospective buyer contacts the agent to schedule a showing. Which of the following is true? A The agent is an undisclosed dual agent B The agent is a disclosed dual agent C The agent does not represent anyone D The agent is a seller's agent
D. The listing agent is also known as the seller's agent. Dual agency only occurs when the listing agent also represents the buyer; • however, simply showing a property to a prospective buyer does not create an agency relationship between the listing agent and the buyer.