National Exam
Which of the following is most likely to have an extremely negative effect on the time and cost of a development project?
Discovery of hazardous materials on the project site
Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal?
Document health and safety issues that may affect both the cost and enjoyment of the home.
Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?
Familial status
What can brokerages do to ensure licensees use technology properly?
Have a solid policies and procedures manual in place
Simon recently passed away. He owned title to his property in severalty, as a fee simple absolute estate. What will happen to his property?
His heirs, as described in his will or the state law of descent, will get the property.
Julio's lender presents him with a loan for $275,000 for 30 years at a 4.75% interest rate. How many discount points does Julio need to pay upfront to lower the interest rate to 4%?
Lowering the interest three quarters of 1% requires three points, since each point is worth one quarter of 1%.
What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?
Market value
Which of the following is an advantage of condominium ownership?
No yard work
The smallest property on the block is also priced lower than any others, but the higher-priced properties that surround it help to drive the property's market value up. What economic principle is at work here?
Progression
Governments like property taxes as a revenue source because
Property values, and therefore taxes, tend to remain stable
What's a power of attorney?
A legal document that allows a person to act as attorney-in-fact for another in a financial, business, or health matter
Which of the following terms means the price a property is worth to its owner as currently enjoyed?
value in use
Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request?
Addendum
Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called
An act of waste
Which of the following is the most common type of buyer representation agreement?
An exclusive right-to-represent agreement is the most popular form of a buyer representation agreement because it gives the licensee the sole right to represent the buyer.
Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property?
Encroachment
What are trust funds?
Money belonging to others held for a specific purpose in the course of a real estate transaction
Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?
void
Why are lenders required to provide the Loan Estimate and Closing Disclosure forms to loan applicants and borrowers?
So borrowers can compare loans and make decisions regarding the affordability of loans offered
What is the name of the federal law that sets forth guidelines regarding telephone solicitation?
Telephone Consumer Protection Act
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.
Mortgage, homeowners, and flood ______ may be included the mortgage payment.
Insurance
Which of the following statements about the fiduciary duty of confidentiality is true?
It doesn't extend to material facts relating to the property.
Contrary to federal fair housing laws, the state where Katrina lives includes age as a protected class. Which of these statements about this conflict is true?
Katrina must follow the more restrictive of federal or state law
A rundown home, overgrown with weeds and in desperate need of repairs, is driving down property values on the block. What economic principle is at work here?
Regression
A professional, on-site measurement of the lot lines and dimensions of a property is known as a(n
Survey
Which of these is NOT an example of an agent executing the duty of reasonable skill and care?
Kevin, Corinne's buyer agent, made several mistakes on Corinne's offer. Most were minor, but one could end up costing Corinne.
The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility?
$1,055The daily tax rate is $5 ($1,825 ÷ 365). The Davises' property taxes for January 1 through July 31 (211 days) is $1,055 ($5 x 211).-for any closing not at the 1st, you must use prorated method
The Slathertons are looking at buying a $300,000 property with a 20-year loan at a 6% interest rate. How much would their monthly principal and interest amount be? Plug in the numbers using the amortization chart in your resources to see what the payment per month would be. (Use the amortization chart your lesson instructed you to print out.)
$2,149.30
If an appraiser has found the value of a property to be $250,000 using a cap rate of 10%, what was the property's net operating income?
$25,000The formula for determining value using the income approach is value = income/rate, which means that income = rate x value. When you multiply a percentage by a number, you're finding the percentage of that number, so 10% of $250,000 is $25,000.
Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay.
$390.91
Kelly is purchasing a property that has an assessed value of $160,000. If the tax rate is 2.5%, what will Kelly likely pay annually in property taxes?
$4,000. 160,000*0.025
The lender will charge a one-and-a-half-point origination fee and two loan discount points. What will be the total due for points on a $115,000 loan?
$4025
Amy is purchasing a $500,000 property, financing $400,000. Assuming a mortgage recording tax rate of $0.115 per $100, what's the mortgage recording tax amount?
$460
Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What's their monthly interest amount?
$562.50
A homeowner has $80,000 of principal left to pay on her mortgage. Her home was recently appraised at $156,000, which is $13,000 more than what she purchased it for. How much equity does she have in her home?
$76,000
Alison and Brent are financing their house purchase of $232,500 with an FHA loan. Their credit score qualifies them for the minimum down payment. What do they need to put down?
$8,137.50
Bonnie is calculating the square footage of a listing. The upper level of the home is 450 square feet. The main floor is 1,200 square feet, including an unfinished laundry area that's 225 square feet. The 1,200-square-foot basement is finished. Bonnie's MLS system disregards below-grade square footage. What square footage will Bonnie mention in her MLS listing and marketing materials?
1,425
Private mortgage insurance may be required on conventional loans where the loan-to-value ratio is in excess of ______%.
80
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%250,000 / 310,000 = 81%
If an apartment building is valued at $970,000 and has a capitalization rate of 9%, what is the net operating income?
87,300 The formula to determine net operating income when you know capitalization rate and value is: rate × value = income (R × V = I). Remember to convert the 9% into a decimal by shifting the decimal point two places to the left: .09 × $970,000 = $87,300.
Roy purchased a newly constructed home with a warranty that covers major structural defects for 10 years, and systems (HVAC, electrical, plumbing) for three years. After living in the home a few months, Roy notices the following defects and submits them all. Which one will likely be covered by the warranty?
A split ceiling joist in the basement
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?
Accounting
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 An arbitration clause in a contract specifies that any contract disputes will be settled through arbitration, rather than through the court system
REALTOR® Arnold was instructed by his client Sebastian to find a buyer who would "fit into the neighborhood." What is Arnold's responsibility in this situation?
Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws.
What are improvements with regard to property?
Artificial attachments to land that include items such as fencing, buildings, and walkways
Ed is a homebuyer reviewing the Loan Estimate he received from a lender. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, he
Asks the lender if there are other options available that would not involve a prepayment penalty
Which one of these is an example of the doctrine of estoppel?
Corrie shows Marvin several properties and prepares CMAs for each. She assists him in making an offer on one. He becomes difficult to work with, and she then says she's not his agent because they don't have a signed agency agreement.
What should brokerages do with regard to using social networking sites to market real estate?
Create policies and procedures that address proper social networking use.
Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?
Depending on his state's laws, Mario may have marketable title.
When it comes to earnest money, which one of the following statements is true?
Earnest money must be placed in a trust account.
The government's authority at all levels to ensure the health, safety and welfare of its citizens, which includes the control of public land use is the definition of
Police power
Nearby industrial odor is an example of which type of depreciation?
External depreciation
While working with a buyer client, Jeffrey filled in the blanks on the purchase agreement, drafted an early occupancy addendum, and assured his buyer that she was "fully protected" and would get her earnest money back if the sale didn't close. He encouraged her to hire an attorney to review the contract and addendum, and invoiced her for a nominal $15 fee to prepare transaction documents. Which of these tasks would NOT be considered unauthorized practice of law?
Filling in the contract blanks
Which of the following is an example of an agent exercising the duties owed to customers and other parties?
Francine disclosed information about the flooding basement to the buyer and buyer's agent.
Personal property includes which of the following?
Free-standing TV
Which of these would most likely be an implied contractual condition in a real estate sales contract?
Freedom from fraud and misrepresentationContracts should specifically define the purchase price, the property being sold/purchased, and buyer and seller names. It likely won't spell out that the contract should be free from fraud or misrepresentation as this is implied under contract law.
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% APRAn ad can show the APR without requiring all of the other credit terms to be disclosed. But if certain other "trigger" terms are included in the ad, such as down payment, payment amount, number of payments, or interest rate (other than APR), this would re
Which of these situations represents an illegal tie-in arrangement?
Grayson tells his seller client, Geneva, that he'll reduce the listing commission if Geneva uses MBS Title Services to close her transaction.
Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide to not show any of Acme's listings and to prohibit showings from Acme buyers to drive Acme out of business. What is this an example of?
Group boycotting
A landlord has an available unit but refuses to show it to several applicants. These applicants are all single women with children. The applicants who are shown the apartment are all individuals or couples without children. In what way is the landlord violating fair housing law?
He is discriminating against people based on familial status by refusing to show available housing.
What happens to an initial offer from the buyer after a seller counters?
It's no longer in play.
Which of the following statements about the fiduciary duty of disclosure is true?
It's owed to the licensee's clients only
Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max's representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he's seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max's agency coupled with interest?
It's still in place because it doesn't terminate on the death or incompetence of the principal.
Which of these situations addresses the fiduciary duty of confidentiality?
Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness.
The Perfect Home brokerage firm was found guilty of running deceptive ads. The Federal Trade Commission might require all of the following EXCEPT
Letters of apology to all affected consumers
Which of the following is one of a listing agent's duties?
Maintain seller confidentiality.
When property with a pre-existing lease is sold, the new owner
Must honor the lease terms unless the lease states otherwise
In which of the following situations can the state use its power of escheat?
Nadine died with no children and no debt.Escheat occurs when a property owner dies without a will in place, and no heirs or creditors can be found.
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
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
Kristin has been unable to make her mortgage payments. Her property went to auction, but the lender didn't accept the high bid. What stage of the foreclosure process is this property now in?
Real estate owned
Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?
Recording provides constructive notice that he owns the property.
Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?
Rectangular government survey
Serena is working with buyer clients interested in purchasing undeveloped land that includes wetlands. They ask Serena whether specific activities and development are permitted. What should Serena do?
Refer the clients to an expert who can provide advice on permitted activities.
Kiley Ann is thrilled to have her real estate license and to be hired on at New Beginnings Brokerage. She's not positive about Luis, her employing broker, though. He seems a little sketchy. For example, when she looks at her independent contractor agreement, it says that she's not entitled to unemployment insurance and has to pay her own income taxes. What should she do?
Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance.
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?
The covenant of warranty
Which of these statements accurately represents one of the required elements in a deed?
The deed includes an act of conveyance and may include a habendum clause.
Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on. What's wrong with Debra's thought process?
The earnest money doesn't belong to Debra. It will be held in an escrow account.
Your buyer Clint loves older homes and wants to make an offer on a beautiful Craftsman. He doesn't like the yellow brick and has plans to paint it a lovely Williamsburg blue. You tell him that he may not be able to change the color or, even if he can, he may have to get the color approved first. What did you see on the property disclosure form that hinted at this?
The house is in a historic preservation district.
A prospective buyer is curious why a previous owner is selling such a perfect home. The licensee knows that the previous owner recently died due to complications from AIDS. How should the licensee respond to the prospective buyer's inquiry?
The licensee can't disclose that a previous owner had HIV or AIDS.
To which of the following are most of the buyer's closing costs typically related?
The mortgage loan the buyer's obtaining
Your clients, Bill and Stacey, are interested in purchasing a piece of land that has several acres of wetlands. Which of the following is a true statement?
The presence of wetlands affects use of the property and should always be noted on appraisal reports.
What would happen if you bought a house and later found out that there were unpaid liens against the property?
The unpaid liens could trigger a foreclosure on your property.
The seller disclosure indicates that the central air conditioning unit is 26 years old. Why might this worry Margot's buyers?
the unit may need to be replaced
Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?
They should have a loan-to-value ratio of 80% or less.Primary mortgage insurance may kick in when the loan-to-value ratio exceeds 80%; that is, the borrower is borrowing more than 80% of the property's value. To be sure they can avoid paying PMI, Sophia and Antonio need to put at least 20% down.
Which of the following is an example of price fixing?
Two brokerages determine a standard commission rate.
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.
USDA Farm Service Agency
Which of these professional activities is NOT covered by the Fair Housing Act?
Vickie's staging company works with investor clients to stage vacant properties.
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
Chelsea's mother owns several rental properties and intends to keep them to pass on to the family. Chelsea holds a special power of attorney to manage the rental properties, including working with the property manager to place and evict tenants as necessary. Which of these would violate the POA?
Without consulting her mother, Chelsea decides to completely refurbish one of the properties
Paul and Blake are touring an open house when they notice that the glass on the sliding patio door is very foggy. Is this a concern, and if so, why?
Yes, this is a sign of a leaky seal which reduces efficiency.
In a real estate transaction, which two parties are owed the same duties?
customers and other parties
Informing parties of material facts related to a transaction describes the duty of
disclosure
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
Which of these describes a bridge loan?
ina is moving across the country to be closer to her family. Her existing home hasn't sold, but she is ready to purchase her new home.
To be an effective property manager, a licensee must be familiar with a variety of
lease agreenments
What must be in place for a real estate licensee to manage properties for others for compensation?
property management agreenment