AMP Real Estate Salesperson Practice Exam

Agent Bob has just joined Broker Ed's office as a new agent. Broker Ed reminds Bob that there are additional fees beyond what Bob has expended in getting his license. The fees are $500 to join a local business association, $400 to participate in the local multiple-listing service, $150 for sales training, $300 for errors and omissions insurance, and $50 per listing per unit list. If Bob has no listing, how much money will he need to get started?

$1,350 $500 + $400 + $150 + $300 = $1,350.

The penalty for a first violation of federal fair housing laws can be as much as

$10,000

Agent Converse has just returned from a closing for a property that sold for $125,000. The property was listed by Sporty's Real Estate Company. Converse received 2.5% of the sale price total commission for the transaction from the closing agent. Converse is on a 55/45 split with his company. How much commission will Converse receive?

$1719 The company received 2.5% of the sale price, and Converse receives 55% of the company's dollars. $125,000 × .025 = $3,125 × .55 = $1,718.75.

Rita Morgan has $86,576 left on her 8.5% mortgage. Her monthly payment is set at $852.56 for principal and interest (she pays her own taxes and insurance). How much of her next payment will go to reduce the principal?

$239.31 A year's interest on the present debt would be $7,358.96 ($86,576 × 0.085). A month's interest is $613.25 ($7,358.96 ÷ 12). The principal portion of her payment is $239.31 ($852.56 − 613.25).

Property manager Debbie has completed the final move-out inspection for Jennifer. The property management company is holding $5,000 in a deposit account. In closing out the account for Jennifer, Debbie noted that there is $800 in agree-upon damages and $500 in late fees. How much of the escrow will Jennifer receive after the appropriate adjustments?

$3,700 5,000-800-500=3700 (Accounts/Disbursements)

Mr. Jones bought a home for $250,000 and paid $15,000 earnest money; he also has an 80% LTV mortgage. How much cash does Jones need to bring to the closing, provided he has no additional closing costs?

$35,000

The FHA mortgage insurance premium is calculated at a rate of 0.5% annually. How much is the premium for the month in which the remaining principal owed is $92,347?

$38.48

A charge of 2.5 discount points on a $178,000 loan equals

$4,450 Convert the discount points to a percentage, then multiply by the loan amount. $178,000 x .025=$4,450 1 point= 1% of the loan amount

What will the amount of taxes payable be if the property's assessed value is $85,000, and the tax rate is 50 mills in a community where the equalization factor is 120%?

$5,100 $85,000X 1.20 = $102,000 $102,000/1,000=102 102x50=$5100

A buyer says he will put 8% of the sale price down as earnest money and obtain an 80% LTV mortgage. How much earnest money will he put down on an $85,000 sale price?

$6,800 Multiply the sale price by the desired percentage the buyer wants to put down. $85,000 × .08 = $6,800.

Property on the shore of Lake Pleasant is selling for $250 per beachfront foot. If Mary Ackerman buys a lot 500 feet deep with 300 feet of shoreline, how much should it cost her?

$75000 Each foot along the lake costs $250, so the total value is $75,000 ($250 × 300').

The owens are buying a $100,000 house with 5% down and an FHA mortgage for the rest. They must pay an upfront MIP of 2.5% in addition to other closing costs that amount to $1,000. how much money will they need at the closing?

$8,375 The Owens will pay at closing a total of $5,000 down payment ($100,000 × 5%) + $1,000 closing costs + $2,375 in mortgage insurance premiums (2.5% of $95,000 mortgage), which adds up to $8,375.

On January 1, Fred Gillespie bought a small residential rental property for $300,000, with the land accounting for 20% of the value. The IRS allows him to depreciate the property improvements over a period of 27.5 years. How much can Fred deduct as a charge for depreciation on this year's income tax return?

$8,727.27

A borrower obtains a $100,000 mortgage at 7.5%. If the monthly payment of $902.77 is credited first to interest and then to principal, what will the balance of the principal be after the borrower makes the first payment?

$99,722 $100,000 × .075 = $7,500 (annual interest) divided by 12 = $625 (monthly interest). $625 of the monthly payment of $902.77 leaves $277.77 in principal. $100,000 − 277.77 = $99,722 as the balance after the first payment.

The federal government requires a leaflet about possible lead paint contamination to be given to any potential purchaser or tenant of a residence built before

1978

In the government survey system of land measurement, how many square miles does a township contain?

36 A township is six miles on each side and contains 36 one-square-mile sections.

A borrower must pay $5,600 for points on a $140,000 loan. How many points is the lender charging for this loan?

4. Divide the dollar amount of the discount points by the loan amount. $5,600/$140,000=.04 or 4 1 point=1% of the loan amount (Calculations/Points)

Which of the following statements best describes a real estate agents liabilities concerning environmental hazards?

A real estate licensee could be liable if he or she should have known about a condition, even if the seller neglected to disclose it.

Agent Grajewski will use which of the following procedures to assist the sellers of 1234 Gold Avenue in setting their listing price?

A comparative market analysis (CMA) Comparative market analysis is the process by which professional agents assist a seller in establishing a listing price. (Property Valuation)

In inflationary times, a property manager would NOT want a long-term lease based on

A fixed rate

Which of the following is used to assure a good title?

A title insurance policy

Buyer Neu asks agent Joe the best way to take title to the property he just bought. Agent Joe should

Advise Neu to seek competent legal counsel Always advise buyers to seek professional advice pertaining to law, finance and tax issues. (agency relationships)

If a jurisdiction requires private property for public use, the first step begins with

An amicable negotiation

Which type of listing agreement provides for the payment of a commission to the listing broker, even in the case where the owner made the sale without the use of the listing broker?

An exclusive right to sell listing This ensures the broker, regardless of who sells the property, that he or she will get a commission. (Contracts)

A landlord is NOT allowed to charge a tenant extra rent because the tenant has a

Child

After John Rawlings bought his apartment, he started receiving his own property tax bills. This indicates that he has bought into a

Condominium

There is a principle in valuation stating that property is purchased with the expectation that it will gain value. This is the principle of

Anticipation Purchaser's belief that market value will rise adds to a property's present value.

When property is appraised as part of the loan application process, a copy of the appraisal

Belongs to the buyer who paid for it

A developer received a loan that covers several parcels of real estate and provides for the release of the mortgage lien on each parcel when it is sold and an agreed-upon amount of the original loan is paid. This type of loan arrangement is called a

Blanket Loan (financing)

The annual real estate taxes on a property are $2,400. The seller pays taxes in arrears in two installments, on June 1 and October 1. If the closing is scheduled for August 28, what taxes will be due and how will the information appear on the HUD 1?

Credit buyer $2,796, and debit seller $2,796. $2,400 ÷ 2 = $1,200; $2,400 ÷ 12 = $200; $2,400 ÷ 36 = $7; half year at $1,200 + 7 months at $200 = $1,400; 28 days at $7 = $196, for a total of $2,796 to be credited to buyer and debited to seller on the HUD 1.

All of the following are required to create a valid mortgage lien except a

Credit life policy Valid Mortgage MUST be in writing, be signed by mortgagor and contain a legal description of the secured property and a statement of the debt owed.

The Equal Credit Opportunity Act prohibits discrimination in credit lending based on

Dependence on public assistance

The holder of a life estate may do all of the following EXCEPT

Direct the disposition of the property at the end of the measuring life. Holder of life estate could mortgage their interest in the property. It may be hard to find a lender willing to do so, but it can be done. (Ownership)

The difference between the market value of a property and the sum of the liens against it is called

Equity Market value-debt=equity

A contract in which an owner promises to pay compensation to a broker for providing a buyer, but is free to enter into the same agreement with other brokers, is known as

an open listing

The manager who sets rental rates should take into consideration the

Going rates elsewhere in the neighborhood

A seller listed his mansion with Elaine Lee of the Halcyon Realty Company at a 9% commission rate. A buyer made an offer of $3.2 million with the help of Marco Lombardi, a sales associate with Lombardi and Sons Realty. The offer was accepted. How much commission will each company receive if Halcyon shares the commission at a 60% to 40% broker to salesperson rate?

Halcyon will receive $172,800, and Lombardi and Sons will receive $115,200.

Man-made additions to real estate are known as

Improvements (Property Valuation)

Office space is usually rented by the

square foot

The death or incapacity of the principal will

terminate the agency

Tenancy by the entirety is a special form of ownership available only to

Married Couples Tenancy by the entirety implies multiple entities (Ownership)

Linda has a three-year lease on her apartment. At the end of three years,

Neither party need give the other any notice of termination Termination or departure is automatic once the term of the lease has expired (Contracts)

A tenant in a strip mall pays a monthly rent that includes all property maintenance chargers, taxes, insurance, utilities, and cleaning services. This is known as a

Net lease A net lease is one that includes rent plus operating expenses within the rental price. (Leasehold Interest)

Army Master Sergeant Jones has just been assigned to your area, and as the buyer's agent for Jones, you provide several homes in the area where a large military population exists but also other homes in other areas within Jones' needs and ability to pay. Have you violated any laws?

No, military status is not protected class under the federal law

As the buyers agent, your client asks if the stated amount of property taxes are appropriate for the asking price of the new-construction home you're about to make an offer on. What should you do?

Provide the buyer with the number of the township tax assessor's office, and have the client contract them prior to writing the contract.

For appraising a 20-year-old single-family residence, the best data is the

Recent sale prices of nearby houses (Valuation)

What happens if the agent has not located a buyer by the end of the listing period?

The agency relationship terminates

Which of the following is the simplest form of ownership?

Severalty One owner

In states where dual agencies are legal, the law requires that in a dual agency, the buyer and seller must

Sign consent forms indicating that they understand the concept of dual agency and the restrictions imposed on the real estate agent.

Which of the following forms of ownership involves more than one owner?

Tenancy by the entirety

In a loan closing, proper signatures on the promissory note create

The indebtedness of the borrower Promissory note is simply a promise to pay the debt

A buyer paid $5,000 for an option to purchase a property within 180 days for $200,000. Within a month, the buyer made an offer to buy the property immediately for $180,000. Which of the following is true in this situation?

The owner may accept the offer for $180,000.

Which of the following is most likely to be used as a legal description to identify a parcel of real estate in a deed?

The recorded plat numbers The plat is a surveyor or engineers map, with complete boundaries and numbers for each block and lot that is entered in the public records. (Real Property)

Which of the following is NOT a criterion for independent contractor status?

The salesperson is given specific duties and procedures

A pet owner loses a cat and puts an ad in the paper offering a reward for its safe return. What type of agreement is this?

Unilateral An agreement in which one person promises to compensate, reward, or thank someone upon the completion of a task, regardless of who does it and without any obligation or promise by anyone to do it, is known as a unilateral agreement. A promise in exchange for a promise is a bilateral contract.

Who can give advice to a prospective buyer on how much to offer for a property?

the buyers agent

Martha James lives in one side of a two-family house. She wants to advertise the other side as non-smoking. Can she legally do so?

Yes, because the right to smoke is not protected by law.

When tenant Heather Grayson opened her ice cream shop in the mall, she installed counters and special freezers. When Heather closes the shop, can she remove them?

Yes, if she repairs any damage caused by their removal. Trade Fixtures may be removed by tenant prior to expiration of lease. (Leasehold Interest)

As a buyer's agent, should you advise your client to get a home inspection on the property she is buying?

Yes. A qualified home inspector may spot defects not previously noted. (Agency Relationships/Contracts)

A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. The contract entered into between the prospect and the broker is called

a buyer broker agreement

Ed Klein has a large lake on his property. He sells a permit to his friend Phil, allowing Phil to fish in his lake at any time for one year. Phil's right to use Ed's property is known as

a license

Robin Smiths neighbor had no room to store his RV, so robin gave him permission to park it in robins backyard. The neighbors right to use robins backyard is known as

a license personal permission that may be withdrawn is known as a license and gives the neighbor no interest in the real estate

Brokerage fees are determined by

a negotiation between the broker and principal

A promise in exchange for a promise supported by consideration is the basis for

a valid binding bilateral agreement

The obligation of protecting any deposits entrusted to an agent is an example of the fiduciary duty of

accountability

In the market or sales data approach to appraisal, the sales prices of similar, recently sold properties are

adjusted

A contract is said to be discharged if

all of its terms and conditions have been met

One effect of a clause in a sales agreement that states that "time is of the essence" might be that

all parties must attend to those details called for in the agreement in a timely manner.

Each point charged when a loan is closed represents one percent of the

amount borrowed a point is one percent of the amount borrowed, not of the full sale price

By executing a listing agreement with a principal, a real estate broker has become

an agent to the principal

Under the Homeowner's Protection Act of 1998, when is PMI automatically terminated?

at 22% equity The act provides that PMI will automatically terminate when the equity reaches 22% if the PMI policy was written after July 29, 1999.

A conventional, fully amortized loan features

constant payments of earned interest and some principal Amortized loans involve some interest and some principal with each payment (Financing)

A purchase in which the seller holds title until a specified number of payments have been made is known as a

contract for deed

In some states, the instrument used instead of a mortgage is a

deed of trust

The person who receives real property through a will is known as a

devisee

A broker obtains an exclusive listing. Until the broker fulfills that contract, it is best described as

executory

The fiduciary duty of obedience includes

following legal instructions

Capacity to enter into a contract is legally absent if a person

has been declared incompetent

Attorney Sam gave agent Molly $100 to show his appreciation for the referral of Molly's client. This type of transaction is

illegal, since its considered a kickback under RESPA

In the rectangular survey system, how are townships numbered

in a backward s-curve, beginning at the upper right, going right to left, then curving left to right, then curving right to left

Which of the following would terminate a listing agreement?

the death of the broker

Dave Gates, a widower, died without leaving a will or other instruction. His surviving children received ownership of his real estate holdings by

law of intestate succession Each state has a set of laws that define the distribution of real estate owned by someone who dies without leaving written instruction. If no heirs are located, the property reverts to the state. (Conveyance of real property)

In the event a buyer fails to perform on an agreement to purchase, the seller may be allowed to keep the earnest money deposit, which is designated by which official term?

liquidated damages

Consideration to bind a contract may be in the form of

money, promises, or services

Which of the following is a requirement for a valid agency relationship?

mutual consent

Nancy Tomsic's tenants all had several months remaining on their leases when she sold her six-unit apartment building to Chuck Dwight. Tenants in this situation typically

need do nothing and may remain until the end of their leases.

A shoe store in the Town Mall pays a base rent each month plus additional rent based on the amount of business it does. It is operating under a

percentage lease

Zoning ordinances typically regulate the

permitted uses of each parcel of land

When the Franks bought their first home, some of their costs included payment of points, establishment of an escrow account, premium for title insurance, and commission to their own buyers' agent. On that year's income tax return, they may deduct the

points

When Mollie Greene signed an offer to purchase the Simons's house, she put an earnest money deposit in the hands of the Simons's listing broker. What should the broker do with the money?

promptly deposit it in a trust or escrow account

Common covenants found in a mortgage could be any of the following EXCEPT a promise to

provide unlimited access to the mortgage

The Civil Rights Act of 1866 prohibits discrimination in real estate based on

race

While listing his house, Bennet Lyons tells his agent, Will Connelly, that he doesn't want the house shown to Asians. Will's best course of action is to

refuse the listing violation of fair housing laws

Which of the following would be included in a spot survey of a single lot?

the location of any improvements

Which of the following is NOT an acceptable legal description?

the street address of a property

A quitclaim deed is often used for transfers

to clear title defects

Ken Laughton's house is "for sale by owner." Robert Hall falls in love with it during an open house, tells Ken he'll pay the full asking price, and promises to send Ken an earnest money check for $5,000. Ken verbally accepts the offer. The contract between them is

unenforceable It is still unenforceable because a contract for real property must be in writing.

Charging more than the legally allowed rate of interest is known as

usury

During contract negotiations, the broker, despite knowledge to the contrary, assures the buyer that the property is suitable for multi-family use. Prior to closing, the buyer learns that zoning regulations prohibit this use of the property. By law, this contract is

voidable at the option of the buyer

Jessie Petersen makes a written offer to buy Sam Lewis's house for $120,000. She confides in Sam's agent, George Everly, that if necessary she'll pay $10,000 more, but she doesn't want Sam to know that. George should

warn Jessie that he must pass on to Sam anything useful he knows, as he owes a duty of loyalty and disclosure to Sam. Jessie is entitled to honest treatment, so Sam should explain that he owes her no confidentiality and that he does owe a duty of notice to Sam.