Exam Review 2

Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes?

$1,759.50

Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase?

$208,000

A buyer with a $242,000 loan has a monthly principal and interest payment of $1,317.66. If $1,033.54 is interest, what's the new principal balance after the first payment is applied?

$241,715.88

Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $200,500. Their tax rate is 1.5%. How much will their monthly taxes be?

$250.62

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a 1% loan origination fee. How much is the loan origination fee?

$3,200

Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment?

$54,150

Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What's their monthly interest amount?

$562.50

Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction?

$8,343

A four-bedroom, four-bath, 4,875-square-foot house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house?

$86.72

The assessed value for your buyer clients' new purchase is $209,000. They feel they got a great deal since they're purchasing the property for $175,000. They've asked you to estimate their monthly property taxes. You know the rate for their jurisdiction is .52%. What is the monthly tax amount your clients owe?

$90.57

In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?

10 years

How many acres are in a parcel described as, "The E 1/2 SE 1/4 NE 1/4 Section 3, Township 4 North, Range 2 East of the 6th PM"?

20

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%

Lynette purchased a property under a bargain and sale deed. Which statement best describes the covenants Lynette's deed provides?

A bargain and sale deed may come with or without covenants of warranty.

How's interest defined as it's related to a mortgage loan payment?

A fee paid to lenders for the use of their money.

What's the penalty for violating federal do not call rules?

A fine of more than $40,000 for each violation.

Alluvion describes new deposits of land that are the result of what natural process?

Accretion

Your brokerage firm uses pre-printed sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information?

Addendum

Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited?

After the seller accepts purchase offer.

Camille, a buyer, wants to change the price already agreed to in a sales contract. What document should she use?

Amendment

Anna manages an apartment complex for her landlord, Katherine. Anna's friend Kevin is looking for an apartment, and without asking Katherine's permission, Anna rents him a two-bedroom apartment that she's had trouble renting for the one-bedroom rate. Which of these statements is true?

Anna has breached her fiduciary duties to Katherine.

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

Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to, and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue?

Arbitration

In states where full disclosure isn't required, it's the ______ responsibility to perform due diligence on the property.

Buyer's

Johannes must obtain a permit for a construction project that is located right next to a wetlands. Which federal law or regulation requires him to get the permit?

Clean Water Act

Which economic principle is related to supply and demand?

Competition

The Amarals are purchasing the house of their dreams and have plans to stay in it for at least the next three decades while they pay back their conventional 30-year loan. Their primary focus, over the life of the loan, is to reduce their payments as much as possible. What is something that could help them achieve this?

Discount points

Derrick just bought his first condo, and he's ready to crack the champagne. Which of the following will Derrick be able to deduct from his income for tax purposes?

Discount points.

Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?

Easement by prescription

Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that?

Ed should remind them that every dwelling, no matter the age or size, should have a home inspection.

Derrick was thrilled to find out that the land he purchased includes several small caves. He's been spelunking for about three years and looks forward to exploring the caves on weekends. Which real property right allows him to do so?

Enjoyment.

Brenda represents Tina in a real estate transaction. Brenda therefore owes Tina ______ duties, such as confidentiality, obedience, and reasonable skill and care.

Fiduciary.

The house that Rhema is considering purchasing is on a perfectly level lot, which is what attracted her to the home after years of living on a hill. It also has a lovely creek at the back of the 60-foot yard. What might Rhema have to purchase if she buys this home?

Flood Insurance

Larry is assisting a buyer who's making an offer on his client's listing. If Larry is too helpful to the buyer, what might occur?

Implied agency and undisclosed dual agency.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______.

In writing, and in accordance with uniform standards.

Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair?

Inspection contingency.

What's the purpose of a firewall?

It prevents hackers from infecting your system with viruses, worms, and malware.

What happens to an initial offer from the buyer after a seller counters?

It's no longer in play.

Andrea and Jim were planning to list their home with Cheryl, but just let her know they no longer wish to work with her. When Cheryl mentioned that listing agreements are legally binding, Andrea and Jim reminded her that their agreement is not legally binding. What would be the reason for this?

Jim didn't sign it.

Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have?

Joint Tenancy.

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?

Lender

Putting clients' interests ahead of all others describes which fiduciary duty?

Loyalty.

When property with a pre-existing lease is sold, the new owner ______.

Must honor the lease terms unless the lease states otherwise.

When buyers haven't spoken to their bank or another lender, how should you handle the situation?

Offer to refer them to a lender and prepare them for a meeting.

Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the ______.

Offerors

On what type of listing (or listings) may a net listing be used in states where they are legal?

Open, exclusive agency, or exclusive right-to-sell listings

Joshua just got a copy of the preliminary report from his title company and is surprised to see that there's a mechanic's lien against his property. What does he have to do to clear this lien?

Pay the bill that resulted in the mechanic's lien.

Whose role is it to develop the comprehensive master plan?

Planning Board Members

Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land's value, he jumped at the opportunity. What's this an example of?

Plottage

Subdivision regulations imposed by developers in an effort to maintain control of the development of the subdivision are an example of ______.

Private land use control.

Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?

Promissory Note

Jerry and Simon signed a contract giving Jerry the option to purchase all of Simon's restaurant equipment for a set price after Simon closes his restaurant next month. The contract contains a provision that states Jerry has one year from the purchase date to file a suit relative to the purchase. After the year is up, Jerry forfeits the right. What kind of contract clause is this?

Statute of limitations

Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean?

The HOA lien takes priority over all other liens.

A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

The amount it would cost to completely replace her home.

Moira has delivered a counter-offer to some potential buyers for her property. Which of these best states the time frame for the buyers' acceptance?

The buyers must respond by the time and date specified in the counter-offer.

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances.

Gary's new seller client is concerned about privacy and doesn't want her listing posted on the MLS. Gary explains to her the potential impact this will have on marketing her property, but the client remains adamant. Gary doesn't list the property on the MLS. What fiduciary duty is at play?

The duty of obedience.

If there's no state or local building code to cover a specific situation, what code must the builder abide by?

The federal building code.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?

The lender has requested a title audit to ensure that the foreclosure was properly handled.

Which of the following is a legitimate and legal way that an exclusive right-to-sell listing agreement may terminate without the seller owing a commission?

The listing agent stops working on the listing.

When completing a CMA, what might be indicated if a comparable property had a quick sale?

The market for similar homes is good.

Harini had a lease with an option to buy on her condo since she wasn't financially stable enough to purchase the condo when she first signed the lease. Two years later Harini was in great financial shape, but she found out that the owner legally sold the condo to another buyer. Harini has to move out next month. What must have happened?

The option expired.

Landlords must abide by all fair housing, civil rights, and ADA regulations as well as comply with all state and federal landlord-tenant legislation. What responsibility does the property manager have related to this?

The property manager, as the landlord's general agent, is responsible for upholding all the laws and regulations required of the landlord.

Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?

The statute of frauds.

Which of the following is a planning and zoning issue that most prospective buyers might need to know?

The zoning designation for the given property.

Why would buyers want to know whether a property is currently experiencing a tax abatement?

Their taxes are likely to increase when the abatement period ends.

Danette hasn't paid the first quarter water bill on her property. It was due on April 1. She's closing with the buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement?

This is an accrued expense, and will appear as a seller debit and a buyer credit.

It's January, and the pool at Roger's listing has been prepped for winter for several weeks. The homeowner assures Roger that it's in good working order. Roger has no reason to disbelieve the homeowner, so he tells prospective buyers that the pool is fine. The property sells, spring comes, and the new owners call to complain that the pump doesn't work, and the pool drain appears to be clogged. What did Roger commit?

Unintentional misrepresentation.

If a contract is for an illegal purpose, it's ______.

Void.

Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?

Void.

Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?

Whether consent was voluntary.

Jason purchased his dream home six months ago. After Jason received an inheritance from his uncle, he decided to pay off his mortgage. What should he consider before doing this?

Whether he will incur a prepayment penalty.

You've listed a 1918 Craftsman with some significant foundation issues—so significant that the buyers walked away after the inspection. They provided you and your sellers with a copy of the inspection report, which also points out some wiring concerns. At today's open house, a prospective buyer asks to see a copy of any inspections done on the property. What should your response be?

You should disclose any adverse material facts, but you don't have to provide the report.

Steve is preparing a comparative market analysis for the Joneses and has selected three comparable properties. How many adjustments should Steve make to the Joneses' property?

Zero

Which of the following is the best definition of a township? a. A 36-square-mile square formed when using the rectangular survey system b. A one-square-mile square formed when using the rectangular survey system c. A permanent reference point used in the measurement of elevations d. The point of beginning used in a metes and bounds survey

a. A 36-square-mile square formed when using the rectangular survey system.

Which of the following statements is true about zoning classifications? a. A home business would be considered an accessory issue. b. A residential property may only have one use. c. Condos are always commercial property. d. Multi-family housing is zoned commercial.

a. A home business would be considered an accessory issue.

After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing? a. Accounting b. Confidentiality c. Disclosure d. Loyalty

a. Accounting

Jules is new to property management. Which of the following tasks may be one of her duties? a. Creating a budget for next year's projected maintenance costs b. Investing profits from the business c. Purchasing the apartments to be managed d. Representing the owner in court

a. Creating a budget for next year's projected maintenance costs.

Which of the following is an acceptable ad based on Regulation Z? a. Get a low interest rate of 4.75% (4.925% APR) with as little as 10% down payment and a 30-year fixed rate with no points. b. Get a low interest rate of 4.75% on a monthly payment of $900. c. Get a low interest rate of 4.75%, with 85% loan to value. d. Get a low interest rate of 4.75% with as little as 3% down.

a. Get a low interest rate of 4.75% (4.925% APR) with as little as 10% down payment and a 30-year fixed rate with no points.

Which of the following statements about the fiduciary duty of confidentiality is true? a. It doesn't extend to material facts relating to the property. b. It encompasses any and all information the client tells the agent, not just confidential information. c. It ends with the termination of the agency agreement. d. It never conflicts with the duty of disclosure.

a. It doesn't extend to material facts relating to the property.

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding, and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true? a. The agent has breached his duty of confidentiality to his client. b. The agent hasn't violated any fiduciary responsibilities to his client. c. The buyer is prohibited from making an offer because of the agent's breach of confidentiality. d. Unless the agent has the seller's permission to share this information, the agent should have disclosed only that the seller is willing to reduce his price, not the amount.

a. The agent has breached his duty of confidentiality to his client.

What's an example of a gross lease? a. The owner pays all property taxes, maintenance, and insurance costs. b. The tenant and owner split the property taxes, maintenance, and insurance costs equally. c. The tenant pays all property taxes, maintenance, and insurance costs. d. The tenant pays property taxes and splits maintenance costs with the owner.

a. The owner pays all property taxes, maintenance, and insurance costs.

Interest rates determine buying power. Which of the following is a true statement? a. When interest rates are high, buyers are often priced out of the market. b. When interest rates are high, buyers will be able to afford higher-priced homes. c. When interest rates climb, more buyers are encouraged to buy. d. When interest rates shift higher, buyers can still buy in the same price range.

a. When interest rates are high, buyers are often priced out of the market.

Which of the following statements regarding reasonable accommodations and modifications is true? a. A landlord can freely question disabled individuals about their disability. b. An individual can make a request for accommodation or modification at any time. c. A property owner must always complete modification requests. d. The property owner is always responsible for paying for any reasonable modifications that are completed on the property.

b. An individual can make a request for accommodation or modification at any time.

Which one of these situations represents the illegal practice of redlining? a. Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values. b. Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods. c. Eunice refused to allow her listing broker to show her house to families with children. d. Jaime was working with Korean clients, so he focused on showing them homes in Korean communities because he thought they would be more comfortable there.

b. Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods.

Which of the following is NOT a characteristic to look for when developing your short list of lenders? a. Competitive pricing b. Excessive fees c. Experience d. Reputation

b. Excessive fees

Which of these is NOT an example of price fixing? a. Five local brokers agree to the same commission split with cooperating brokers. b. Jake's firm agrees to charge all clients a listing commission of between 2% and 2.5%. c. The brokerage firms that belong to a specific association agree to prohibit buyer commission rebates. d. Two local firms agree to the same commission split between them and their associated licensees.

b. Jake's firm agrees to charge all clients a listing commission of between 2% and 2.5%.

Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence? a. Listing a multi-million-dollar residence in the city's exclusive lakeshore estates. b. Listing a property in the main part of the city that she'll market as a fixer-upper. c. Working with a buyer client to purchase a condo. d. Working with an investor who intends to purchase a rental property.

b. Listing a property in the main part of the city that she'll market as a fixer-upper.

Which of the following is a duty of a property manager? a. Handling domestic disputes between tenants b. Maintaining the property c. Picking up after tenants' pets d. Referring all interested tenants directly to the owner

b. Maintaining the property.

Under which of the following circumstances would the client and agent most likely mutually agree to terminate a listing? a. A buyer approached the seller with a much higher offer than the current listing price. b. The agent and client don't agree on the best way to price, maintain, and market the property. c. The client has found a buyer and wants to avoid paying a commission. d. The client's cousin just became licensed and needs her first listing.

b. The agent and client don't agree on the best way to price, maintain, and market the property.

Norman, the seller's agent, notices a significant crack in the foundation that the inspector failed to note in the inspection report. Norman decides to keep this information to himself. He really needs to close this deal. Which fiduciary duty has Norman breached? a. The duty of accounting b. The duty of disclosure c. The duty of obedience d. The duty of reasonable skill and care

b. The duty of disclosure.

If your clients are in a competitive bidding situation and want to include multiple contingencies in their offer, what should you say to them? a. "Contingencies kill deals." b. "Great idea. This will help our offer stand out." c. "Let's evaluate which contingencies matter most to you and consider omitting the rest." d. "To be competitive, you should remove all contingencies."

c. "Let's evaluate which contingencies matter most to you and consider omitting the rest."

Which of these is NOT an example of a group boycott? a. Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide not to show any of Acme's listings and to prohibit showings to Acme buyers so they can drive Acme out of business. b. Deb, a licensee, is unhappy with the marketing materials a local company produced. She shares her concerns with Irving, a colleague, and they agree to avoid doing business with this company—and to share the news with other colleagues. c. Sean and the associated brokers in his firm agree to purchase their marketing materials from a single supplier so they get a quantity discount. d. Several brokerages in a certain area agree to stop running advertisements in a local publication.

c. Sean and the associated brokers in his firm agree to purchase their marketing materials from a single supplier so they get a quantity discount.

Which one of these would void a deed that's intended to convey property? a. The grantee is not mentally competent. b. The grantee's signature is not acknowledged. c. The grantor is not mentally competent. d. The transfer includes no monetary consideration.

c. The grantor is not mentally competent.

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

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

The Housing and Community Development Act of 1974 added which protected class to federal fair housing law? a. Color b. Disability c. Religion d. Sex

d. Sex

Marla's excited about closing on a cute lakefront cottage. But when she reads the report from the home inspection, she learns that the chimney leaks and that there is water damage in several places. This wasn't on any of the seller's disclosures. Which of these is the best option for Marla? a. Complete the purchase and plan to spend a lot of money trying to make her cottage leakproof. b. Complete the purchase, then sue the seller for fraud. c. Find a lawyer and file a class action suit against the chimney mason. d. Terminate the agreement and ask for a refund of her earnest money.

d. Terminate the agreement and ask for a refund of her earnest money.

What title guarantees will Jody have when she buys a property at a foreclosure auction? a. The covenant against encumbrances b. The covenant of further assurances c. The covenant of quiet enjoyment d. The covenant of seisin

d. The covenant of seisin.

Renee listed her property for three months starting on March 13. By August, the property hasn't sold. This is after lots of marketing and effort from the agent, a price adjustment, and several showings. Renee decided to list the property with another firm. Under which of these conditions can Renee list the property with another firm without breaching her agreement? a. She can terminate with no penalty as long as she lists with another firm. b. The agent abandoned the listing. c. The agent didn't put forth enough effort, so Renee can terminate the agreement. d. The listing agreement expired.

d. The listing agreement expired.

Which of these might bring a charge of illegal steering against a licensee? a. Benny screens the properties he shows his clients based on the clients' preferences. b. Johnny is working with a client who has a disability. At the client's request, Johnny refrains from showing the client listings that aren't ADA accessible. c. Norton encourages his clients to contact local agencies to learn more about a neighborhood's schools, crime rates, and religious institutions. d. When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.

d. When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.