CE Shop Final Exam Course 2

Jimmy owns a vacant piece of land. He plans to build a home on the land and then sell it. What type of loan is he most likely to acquire to finance this project?

Construction

How many feet are in one yard?

three

If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? 20% 25% 40% 5%

20% 40,000/200,000= 0.2

Find the area of a square flower bed where each side measures 4.5 m. 1 meters squared 20.25 meters squared 4.5 meters squared 9 meters squared

20.25 meters squared

Over how many years is a commercial property depreciated?

39 Years

A CMA or a BPO is an example of ______. A formal appraisal An assessment An informal estimate of market value An inspection

An informal estimate of market value

Which loan is a type of gap financing that is used temporarily until the consumer can obtain permanent financing? Blanket loan Bridge loan Reverse mortgage Wrap-around mortgage

Bridge Loan

ROI = ______ / initial cash investment Cash flow Effective operating income Gross operating income Principal payment and interest

Cash flow

Which economic principle is related to supply and demand?

Competition

Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?

Highest and Best Use

A Minnesota home warranty vendee notified the vendor of a defect with a window 10 months after moving into the property. What does the vendor need to do next? Inspect the defect within 30 days of the notification. Nothing; window defects aren't covered under a home warranty. Provide a written offer of repair within 30 days of the notification. Repair the defect within 15 days of the notification.

Inspect the defect within 30 days of the notification.

Which of these scenarios is basically the same as fraud?

Jeannie's ad read "all new fixtures," when most of the fixtures were just cleaned up and re-installed.

Jerry is a new real estate licensee and is helping his buyer clients write up their purchase offer. Which of these statements is true?

Jerry should include the legal description in the offer because it provides a complete description of the property.

In Minnesota, "offer to purchase" and "sales contract" are alternate terms for the __________________. Buyer representation agreement Deed Listing agreement Purchase agreement

Purchase agreement

What is the maximum amount of time a protection or override clause can be in effect?

Six Months

Which of the following scenarios describes information that a licensee must disclose?

The seller didn't disclose any leaks, but the licensee sees moisture on the basement floor.

Lawrence is a buyer closing on a home purchase for which he's obtaining financing. He receives a Loan Estimate from his lender. What's one purpose of this document?

To provide the estimated closing costs for Lawrence's loan

You get a loan from the Loan Star Bank to help pay for your home. Find the interest on the loan if you borrowed $12,000 at 10% for one year.

$1,200 $12,000 * 0.1 = $1,200

We know that the original loan was for $17,000 with an interest rate of 9.5%. How much interest would be charged if the loan is paid off in 11 months? $1,416 $1,480 $1,545 $1,615

$1,480 17,000 * 0.095 = 1,615 1,615/12 (monthly rate) = 134.58 134.58 * 11 = 1,480.42 and then just round down to whole #

If you sell a home for $143,000, and your commission rate is 5%, what is your commission on the sale of this home? $7,150 $7,500 $8,580 $9,440

$7,150 143,000 * 0.05 = 7,150

Bradley listed a house at an 8% commission rate, and it just sold for $723,500. His firm and the buyer's agent's firm split the commission equally between them. Then Bradley, who has a 50/50 commission split with his broker, took his check to the bank. How much did Bradley earn from this transaction?

$14,470 723,500 * 0.08 =57,880 57,880/2 = 28,940 28,940/2 = 14,470

A property is 60 feet long and 75 feet wide. What is its area?

4,500 square feet

If a property is 500 feet by 800 feet, what's the front footage?

500 feet

Shelly's flower business is blooming and it's time for her business to grow. She plans to take out a business loan to open two more shops on the north side of town. Which lending institution would she most likely go to for the loan?

A Commercial Bank

The Adams family is financing their loan through Acme Bank and their agent negotiated a great sales price on their new home. Smith Title Company processed the loan documents. The Adamses must purchase mortgage insurance. Who does the insurance protect?

Acme Bank

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this? Addendum Amendment Annotation Appendix

Amendment

What is another name for the contract for deed?

An installment contract

Shannon doesn't understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?

Appraisal

The fibers of what material are dangerous when inhaled because they can lodge in the lungs and intestines, causing cancer? Asbestos Lead paint Radon Silicone

Asbestos

How do you calculate the area for a square room?

Multiply the length of two sides together

A family of four, with children ages six and nine, is denied the opportunity to view an available unit in housing intended for older persons. Which of the following statements is true?

The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons.

You're measuring the square footage of a single-family home you've just built. What national requirements apply to your measurements?

There are no national requirements.

When is private mortgage insurance typically required on a conventional loan? When the borrower has experienced a recent bankruptcy. When the borrower's credit is below 640. When the borrower's down payment is less than 20%. When the loan is backed by FHA.

When the borrower's down payment is less than 20%.

Missing, cracked, or displaced roof shingles can indicate ______ damage.

Wind

What's the best practice for handling blank areas of a listing agreement form that don't apply to a listing?

Write "N/A" in the blanks.

Licensee Janice has found a way to work with prospective buyers without ever leaving her desk: She sets them up with automated email messages for listings that meet their criteria, and answers any questions they have when they call. Is Janice doing anything wrong? No, this is how agents work with buyers. No, this is how all agents work. Yes, because she should meet them in person before working for them. Yes, because this constitutes the illegal practice of real estate.

Yes, because she should meet them in person before working for them.

Among other things, what should a listing in the MLS always include?

At least one Photo

Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it? Compare it to the Loan Estimate. File it with her mortgage papers. Take it to the closing. Use the information to compare loan costs with those of other lenders.

Compare it to the Loan Estimate

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 has the highest priority?

Conditions of Sale

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 your suggested list price 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.

A third party holds legal title to Jackie and Tom's house until their loan is paid off. What type of security instrument was used to secure the real estate transaction?

Deed of Trust

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full? Acceleration Alienation Defeasance Due-on-sale

Defeasance

What must sellers provide prospective buyers of homes built prior to 1978, in addition to the federally required disclosure form?

EPA lead safety pamphlet

Which of the following is part of the Consumer Financial Protection Bureau's mission of consumer protection?

Enforce consumer financial protection laws.

Your buyer clients, the Thompsons, told you about a problem they ran into with the lender that handled their mortgage. The Thompsons, who are African American, were given less favorable loan terms than a white couple they know who used the same lender. You know the Thompsons have excellent credit. Which act should you make them aware of? Community Reinvestment Act Consumer Credit Protection Act Equal Credit Opportunity Act Home Mortgage Disclosure Act

Equal Credit Opportunity Act

When working with a seller, you signed a listing agreement that ensured you'd receive a commission, provided the property sold during the listing term. What type of listing agreement did you sign? Exclusive agency Exclusive right to collect commission Exclusive right to sell Net listing

Exclusive right to sell

If two parties enter into a contractual agreement with each other to perform an illegal act, which of the following statements is true of the contract? It is voidable, because Jesse is not mentally competent to sign a contract. It is voidable, because Jesse probably signed it under duress. It is voidable, because the consideration, as a percentage rather than a dollar amount, is not clearly stated. It is void because it is not for a lawful purpose.

It is void because it is not for a lawful purpose.

How do you calculate the area for a rectangular room?

Multiply the length times the width.

Which type of buyer agency offers the flexibility to work with multiple agents but results in buyers acting on their own behalf since no agent owes fiduciary duties? Exclusive agency Exclusive right to represent Limited agency Open agency

Open Agency

Which of the following is a legitimate reason to counter an offer?

Price

Ray is in a bit of a predicament. He owes more on his mortgage than his property is worth, but can no longer afford the payments. He receives permission from his lender to sell the property for less than what he owes. What is this an example of? Bankruptcy Repayment plan Short sale Voluntary conveyance of deed

Short Sale

When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______.

Subject to existing financing

A buyer who discovers after closing that a seller wasn't honest about the property condition on the required disclosures can ______.

Sue the seller

Real estate licensees who want to uphold the Fair Housing Act should make a habit out of which of the following actions?

Tell potential clients in their initial meeting that they are committed to upholding fair housing laws.

John's home is up for sale. He originally bought it five years ago for $300,000. Its current value is $350,000. His real estate agent notified him that a buyer just made an offer on his home for $365,000, which is the price for which other similar homes in the neighborhood are selling, and John accepts. What does the price of $365,000 represent? The appraised value The assessed value The investment value The market value

The market value

Which of the following would NOT require the issuance of a home warranty in Minnesota? A major home renovation that includes plumbing installation The sale of a newly constructed four-unit residential building The sale of a newly constructed single-family dwelling The sale of a single-family home from the original owner and occupant to a new owner

The sale of a single-family home from the original owner and occupant to a new owner

Which of the following statements is true about the listing presentation? It's best to leave out financial data (such as a CMA or comparable property information) and listing agreements, so the seller doesn't think you're jumping the gun and already counting your commission. The less you say, the better. You don't want to overwhelm your potential clients with numbers and decisions at this first presentation. The most important part of a listing presentation is to make the buyers like you as a person. Try not to talk numbers or about their house, but instead focus on charming them. You should go into the presentation fully prepared with a comparative market analysis, listing agreement, MLS listings of comparable properties, and your plan for marketing the sellers' property.

You should go into the presentation fully prepared with a comparative market analysis, listing agreement, MLS listings of comparable properties, and your plan for marketing the sellers' property

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.

Georgia, a buyer, recently lost her job and hasn't been able to make payments on her contract for deed agreement. The seller can either evict her or ______. Extend the contract Forgive her Sue her Turn the agreement over to a bank

Extend the contract

Individuals who experience housing discrimination are provided the opportunity to file a complaint based on the provisions of which act? Americans with Disabilities Act of 1990 Civil Rights of 1866 Fair Housing Act of 1968 Fair Housing Amendments Act of 1988

Fair Housing Act of 1968

Which of the following units of measurement is used when determining the length of a wall? Cubic centimeters Cubic feet Feet Square feet

Feet

Which contingency protects the buyer in the event the buyer cannot get a loan? Appraisal Financing Inspection Interest rates

Financing

Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their six-bedroom house. What two types of data will Boris gather? Digital and hand-written General and specific Old and recent Pertinent and unrelated

General and Specific

Which of the following individuals would be a competent party to a contract?

Graciella, a 28-year-old unemployed parolee

What can brokerages do to ensure licensees use technology properly? Forbid new technology from being used for marketing and communication. Have a solid policies and procedures manual in place. Review all communications sent between licensees and consumers. Track internet and phone usage.

Have a solid policies and procedures manual in place.

Inconsistent temperatures from room to room is a common indication of a problem with what system or home feature? Electrical Foundation Heating and cooling Roofing

Heating and cooling

When Marcy toured her new client's house, she noticed paint peeling off of the shutters. When she asked the seller if the house was painted with lead-based paint, he replied, "I'm not sure ... I inherited the house from my dad, who built it in the '50s." What is Marcy required to do? Based on the build date, she should assume the property has lead-based paint and advise the seller that it must be remediated before listing the property. Have the seller test for lead-based paint. Inform the seller that he needs to complete the lead-based paint disclosure form and provide potential buyers with the EPA pamphlet regarding lead hazards. Take a sample of the peeling paint with her, have it tested, and have the seller reimburse her for the testing cost at settlement.

Inform the seller that he needs to complete the lead-based paint disclosure form and provide potential buyers with the EPA pamphlet regarding lead hazards.

Which of the following statements is true about radon in Minnesota? It can't be corrected. It's a serious environmental problem. It's common, but not a health concern. It's relatively rare.

It's a serious environmental problem.

Which statement about lead-related health problems is true? Lead can be traced to senioritis. Lead causes blindness upon contact with the eyes. Lead is associated with coronary heart disease. Lead may cause behavioral problems, learning disabilities, seizures, and, in extreme cases, death.

Lead may cause behavioral problems, learning disabilities, seizures, and, in extreme cases, death.

Which of the following is an essential element of a valid real estate contract? Duress Legal purpose Misrepresentation Mutual mistake

Legal Purposes

In non-full-disclosure states, whose responsibility is it to notify sellers of their duty to disclose required items? Buyer Licensee representing the buyer Licensee representing the seller Transactional broker

Licensee representing the seller

As a security precaution, which of the following is something you should do?

Limit the amount of personal information you post.

A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.

Loan-to-value

Which type of listing is not legal in some states because it can lead to a conflict of interest?

Net Listing

Which one of the following statements about asbestos is true? Homeowners can safely remove it. It's harmful only if left in place. It's not harmful at low levels. No amount of it is considered safe.

No amount of it is considered safe.

Can buyers using a contract for deed in Minnesota also take advantage of state first-time homebuyer programs? *No, because contracts for deed already have the advantage of lower payments. *No, buyers using a contract for deed are not eligible for those programs. *Yes, all first-time homebuyers are eligible. *Yes, as long as they fill out the appropriate paperwork.

No, buyers using a contract for deed are not eligible for those programs.

Madeline is a property manager who's calculating the vacancy rate for the apartment building she manages. What formula would she use to do this?

Number of vacant units ÷ total units

Seller Jeremiah has no cash on hand, but the buyers have outlined some repairs they want made in order to close on the purchase. Which of the following is his best option if he wants this transaction to close? Do the repairs himself, even if he's not qualified. Offer a seller credit to cover the cost of the repairs. Reduce the sales price by twice the amount estimated for the repairs. Tell the buyers he can't make the repairs and hope they'll agree to buy the house anyway.

Offer a seller credit to cover the cost of the repairs.

How many copies of an offer does a buyer need to sign?

One

Under which types of agency agreement may a buyer and agent operate? Exclusive agency only Exclusive right to represent only Open, exclusive right to represent, and exclusive agency Open or exclusive agency only

Open, exclusive right to represent, and exclusive agency

______ lending was a contributing factor to the housing collapse in the mid-2000s. Invasive Non-discriminatory Predatory Underwritten

Predatory

In which section of the Standard Residential Purchase Agreement do buyers indicate the amount of earnest money they're putting down?

Price and Terms

Which is not one of the lender requirements under the Community Reinvestment Act? Offering financing in low-income housing communities Participating in development and rehabilitation projects in low-income neighborhoods Providing loan programs for housing, small businesses, and small farms Providing school loans in low-income areas

Providing school loans in low-income areas

The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? Equity mortgage Purchase agreement Purchase money mortgage Seller-insured loan

Purchase money mortgage

What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act? Regulation 120, Part B Regulation B Regulation C Regulation ECOA

Regulation B

Which of the following scenarios is considered a violation of FTC advertising rules?

Sarah just started her career as a solo agent and decided to try a new marketing campaign slogan: "Come let our team of hard-working agents find you the home of your dreams!"

Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______.

Secondary market players

Christopher owns four separate tracts of agricultural land in Greater Minnesota. His lender has begun foreclosure proceedings. The sale of one tract of land would be enough to satisfy Christopher's debt. What will the lender most likely do? Sell all four tracts at the foreclosure sale. Sell one of the four tracts at the foreclosure sale. Sell three of the four tracts at the foreclosure sale. Sell two of the four tracts at the foreclosure sale.

Sell one of the four tracts at the foreclosure sale.

Which of the following factors should be considered when determining an acceptable sales price? Seller's loan payoff amount What personal property will be left in the property What type of financing the seller will accept from the buyer When the seller can vacate the property

Seller's loan payoff amount

In which section of a Minnesota lease will you find the beginning and ending dates of the lease? Occupancy and Use Receipt Tenants Term

Term

Jasmine has a mortgage on her property, but allows her homeowner's insurance to lapse. Which of these is a possible consequence of this action? Jasmine can't occupy the residence. Jasmine can't pay off her loan early. The lender can put Jasmine's loan in default. The lender can sue Jasmine.

The lender can put Jasmine's loan in default.

Kelly is closing on the house she's purchasing on Wednesday. Which of these statements is true? Kelly must receive the Loan Estimate at least four days before closing. The closing officer must deliver the Closing Disclosure at closing. The lender must provide the Closing Disclosure by Friday of the week before closing. The Loan Estimate amounts must be within 1/4 of a percent of the final settlement costs.

The lender must provide the Closing Disclosure by Friday of the week before closing.

Terrance is behind on his mortgage payments. He received a notice from his lender notifying him that he's in default, giving him options for addressing the default, and providing information about foreclosure prevention counseling. Terrance didn't take any action, and the lender initiated foreclosure by advertisement proceedings. The property was sold at auction six weeks ago. What is the statutory redemption period? The period after the foreclosure sale during which Terrance could continue to occupy the home and buy it back The period between Terrance receiving the default notice and when the foreclosure sale was held The period between the foreclosure sale and Terrance's eviction The timeframe between Terrance receiving the default notice and the date he can purchase the property back

The period after the foreclosure sale during which Terrance could continue to occupy the home and buy it back

Which one of the following statements is true for a sale that's subject to an existing mortgage lien? A novation can be used to remove the original borrower's liability. The lender may charge a fee to the new borrower. The lender may require the new borrower to meet qualification standards. The seller's credit score may improve although he's not making any mortgage payments.

The seller's credit score may improve although he's not making any mortgage payments.

Which of the following is true about lockboxes? They must be hidden from plain sight. They must be visible from the sidewalk. They must be visible from the street. They require a seller's written permission to post.

They require a seller's written permission to post.

Which statement is true regarding most government loans? Borrowers must put at least 20% down. Private mortgage insurance (PMI) is required. The government provides the funds. They're insured or guaranteed by the government.

They're insured or guaranteed by the government.

Why might you want to share the progression of buyer agency over time with a buyer? To show how it disappeared over time To show how it has evolved to benefit buyers To show why it's not required To show why it's now mandated

To show how it has evolved to benefit buyers

The Elliotts have lived in their current house for five years. Space got a little tight after their first child was born. Now that they're expecting their second child, they've decided they really need a new house with more space in a good school district. What type of buyers are the Elliotts? First-time buyers Retirees Trade-down buyers Trade-up buyers

Trade-up buyers

Why should you avoid describing a property as "secluded" when marketing through a social network? Everyone defines secluded differently, so it isn't specific enough. Most homebuyers are interested in being part of a community. Property descriptions should focus more on the home, not its surroundings. Thieves may see this as an opportunity to enter the house unseen.

Thieves may see this as an opportunity to enter the house unseen.

Ken signed a contract to purchase Debra's condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken's birthday. What was the status of the contract when Ken and Debra entered into it?

Voidable