3rd practice exam test

Clint is interested in making an offer on a house with hardwood floors that will need to be replaced. The hallway is 18' x 6'. The kitchen is 20' x 30'. The living room is 25' x 45'. Two bedrooms are 12' x 16', and the master bedroom is 14' x 20'. If the cost of the flooring is $5.48 per square foot, and the cost of installation is $1.49 per square foot, how much can Clint plan to spend to replace the floors?

$17,404.09 (First, find the area of each room and add them together to get the total square footage. 108 + 600 + 1125 + 192 + 192 + 280 = 2,497 square feet. The total cost of the flooring per sq. ft. is $5.48 + $1.49 = $6.97. 2,497 x $6.97 = $17, 404.09.

A buyer with a $250,000 loan has a monthly principal and interest payment of $2,042.71. If $1,145.83 is interest, what is the new principal balance after the first payment is applied?

$249,103.12. ( $1,145.83 of the total payment is interest, that leaves $896.88 to be applied to principal: $250,000 - $896.88 = $249,103.12.)

Which of the following questions can an agent in a dual agency transaction answer without breaching her duties to either client?

1. Are you aware of any structural issues with the property? 2. How much should my counter-offer to the buyer be? 3. What should I agree to fix from this list the buyer sent? Are you aware of any structural issues with the property? (The agent can (and is required to) answer questions from both clients regarding material or adverse material facts.

Which of these is an example of bulk zoning?

1. Misty Falls restricts building any structure within 15 feet of a roadway. 2. Oak City developers must include subdivision open space proportionate to the overall development acreage. 3. Rushton city council members approved the location of a light industrial building within a currently-zoned agricultural area. 1. Misty Falls restricts building any structure within 15 feet of a roadway.

Which of the following is a reason a lender might charge a prepayment penalty?

1. To deter buyers from ever paying off their mortgage 2. To recover the money lost in anticipated interest 3. Because the lender is a subprime lender To recover the money lost in anticipated interest (Lenders expect to make a certain amount of interest when making loans. If the loan is paid off before the interest is paid, a lender may reserve the right to charge a prepayment penalty.

Which of the following is an example of sub-agency?

1.Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller. 2. Kermit is represented by Bert, an agent with Street Realty. Today they're seeing Oscar's house, which has been listed by Oscar's agent, Ernie, from Energy Realty. 1.Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller.

The main floor of Kinsey's home is 1,425 square feet. The upper level is 875 square feet with one unfinished bedroom that measures 150 square feet. The finished basement is 1,425 square feet with 7.5-foot ceilings. Kinsey's MLS listing includes below-grade square footage in livable area. What's the reportable square footage for Kinsey's home?

3,575 (Kinsey should exclude the 150-square-foot unfinished bedroom. This gives us a calculation of: 1,425 + (875 - 150) + 1,425, or 3,575 square feet.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate?

6.5%. (Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.)

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.)

81% (To get the answer, divide $250,000 by $310,000. Multiply the result (0.81) by 100 and add a % sign.

Jenna was surprised that the charming Tudor she was touring was still on the market. "I don't see anything bad on the disclosure," she told her agent, "and the price seems fine. Why do you think it hasn't sold?" Her agent Louise responded, "Well, I heard that UPS was opening a new air hub two miles away early next year." Why might this affect Jenna's or other buyers' interest in the property?

A UPS hub would mean many more flights overhead each day. (Being in a flight path is a location issue of interest to many buyers, but one that doesn't have to be disclosed on a seller disclosure. Remember to help your clients do their location homework for any property of interest!

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?

A trustee will hold title until the loan is paid.

What does the Federal Trade Commission regulate?

Advertising

Monica received a promotion at work that requires her to relocate. Because of the timing of her promotion, she'll need to buy a new house in her new city before her current one is sold. So, she won't have any equity from her current home to make a down payment on the new house. What loan option would allow her to make the purchase before selling the old house?

Bridge loan (Sometimes there is a delay between the sale of a property and the purchase of another, and the bridge loan gives the homeowner the ability to pay for two homes at the same time.

Which of these is a potential title issue with a foreclosure?

Clouds on title

Which economic principle is related to supply and demand?

Competition (Competition impacts value because the more similar properties that are on the market, the lower the price will be driven. Competition is related to supply and demand.

Which of the following loans may require compliance with Appraiser Independence Requirements?

Conventional. (AIR may apply to conventional loans used to purchase a single-family dwelling of one to four units. Federally insured or guaranteed loans (such as FHA or VA or commercial loans) are exempt.

Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

Get a low 4.925% APR (An ad can show the APR without disclosing all the other credit terms. But if certain other "trigger" terms are included, such as down payment, payment amount, number of payments, or interest rate (other than APR), this would require full disclosure.

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property. (When faced with a range of prices, give more weight to the comparable that's most similar to the subject property.

Two essential elements of a deed are the ______.

Grantor's signature and conveyance clause

Which of the following could be a sign of a plumbing problem?

Low water pressure

Which of these statements about title marketability standards is correct?

Marketable title carries a higher standard of assurance than insurable title.

Which legal description method uses compass headings and directions?

Metes and bounds

Leases may be terminated by expiration, eviction, or ______.

Mutual agreement

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed is applied last?

Physical characteristics

When representing the seller, what duty do you owe a buyer?

Present offers from the buyer to your seller.

What type of arrangement allows the buyer to retain title to the property, but places a security interest in the property on behalf of the seller?

Purchase money mortgages (allow the buyer to retain title to the property, but the seller has security interest in the property.)

According to UETA, an electronic signature is defined as "an electronic sound, symbol, or process attached to or logically associated with a(n) _________ and executed or adopted by a person with the intent to sign."

Record

Victor's family has always owned this particular lake house. When he was little, he remembers the "beach" being no more than four feet wide before the waterline. Now Victor brings his own children to the lake house, but the beach is almost seven feet wide. What natural process could explain the beach being bigger?

Reliction (the process by which water gradually recedes, which reveals new land.)

Which amendment to CERCLA says that "innocent landowners" aren't responsible for clean-up of hazardous contamination?

Superfunds Amendments and Reauthorization Act (The Superfund Amendments and Reauthorization Act, or SARA, says that innocent landowners aren't responsible for clean-up of hazardous contamination.

Gregory and Dianne are American citizens of Cuban origin, and when their home loan is denied, they suspect discrimination. Which of the following acts prohibits lender discrimination on the basis of the protected class of national origin?

The Equal Credit Opportunity Act (prohibits lender discrimination on the basis of an applicant's protected class status, such as national origin.)

Which act created an agency to investigate antitrust practices?

The Federal Trade Commission Act (created the FTC. This agency investigates practices and will stop companies and individuals from committing antitrust violations. )

A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true?

The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms. (The APR can be included in an ad without requiring disclosure of all credit terms. APR figures allow consumers to make an informed comparison between loans, which is TILA's goal.

When a buyer is represented by a licensee, who is responsible for following up on issues identified in the inspection report to ensure that they are addressed?

The buyer's agent

Which covenant requires the grantor to execute any necessary legal documents (within his power) necessary to fix title defects discovered after closing?

The covenant of further assurances (The covenant of further assurances requires grantors to take necessary steps (within their scope of power) to perfect the title conveyed.

When purchasing a short sale or foreclosure, what's one of the biggest frustrations buyers face?

The length of time it takes to purchase a distressed property

When calculating loan-to-value ratios, which of the following will be used by the lender?

The lesser of the sales price or appraisal value

What's the purpose of the fixed/adjustable rate note?

To convert the interest rate from fixed to adjustable

As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?

Voidable (A voidable contract can be cancelled by one or more parties because it's missing an essential element. In this situation, Melanie, the buyer, has the right to cancel the contract and have her earnest money refunded.

Burt terminated his exclusive right-to-sell listing agreement with Scott, his listing broker, without cause. Burt may legally do this as long as he's ______.

Willing to pay Scott's commission anyway

Your client is purchasing a single-family home with a VA-guaranteed loan. The listing price is $150,000. Is an appraisal by a certified appraiser required?

Yes, and since the purchase is financed with a VA-guaranteed loan, the appraiser must be VA certified. (A VA-guaranteed loan requires an appraisal by a VA-certified appraiser, who must also be licensed or certified by the state.

Gerard has been offered a 4% interest rate on a $300,000 mortgage. His monthly mortgage payment would run about $950 per month. He plans to pay $2,000 up front to drop his interest rate to 3.75% and his payment to $920 per month. What is this upfront charge called?

discount point (an up front charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires.)

Which of the following defines when a lender charges a borrower more than the highest allowable interest rate?

usury (the illegal action or practice of lending money at unreasonably high rates of interest.