real estate 101

Michael paid $385,000 for his home, which now has an assessed value of $392,000. His tax rate is 0.51%. How much with his monthly taxes be?

$166.60

Jimmy is a real estate investor who owns several rental properties in the area. After the economy took a turn, he was relying on TRA 86 to be able to deduct some of his losses. He is active in the management of the properties and his taxable income is $90,000. What is the maximum deduction Jimmy can claim on his taxes to make up for his losses on those rental properties?

$25,000

a buyer is purchasing a property for $400,000 his loan to value ratio is 80% the lender also charges a one-point loan origination fee. how much is the origination fee?

$3200

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

A buyer is securing a home loan for $500,000. The state mortgage recording tax rate is $0.115 per $100. What's the mortgage recording tax?

$575

If you sell a home for $143,000, and your commission rate is 5%, what is your commission on the sale of this home?

$7150

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?

$720

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?

180

Traditionally, lenders' qualifying mortgage rules use a range of percentages to qualify for both the housing debt-to-income ratio and the total debt-to-income ratio. What are those ratio ranges?

25% to 28% for housing; 33% to 36% for total debt

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80%

What well-known economic principle says that a property's value is determined by what it would cost to purchase a similar property?

Substitution

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA

Which type of agent is an escrow officer?

Limited agent

which of these statements best represent what happens after a federal fair housing complaint is made

a fair housing specialist will review the complaint

which of the following statements best describes a sales contract

a legally binding written contract between a property's potential buyer and seller

When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "north for 314 feet" represent?

a mete

Cambridge Apartments provides an open parking lot for their residents. There is adequate parking and all spaces are available on a "first-come, first-served" basis. Alton has MS and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests?

cambridge must allow an exception to the first-come first served policy for alton

Randall's clients, Carma and Trent, are looking for a mountain cabin. They tell Randall they'll pay him a $2,000 finder's fee if he finds the cabin that checks all of their boxes, and they close on it. Randall finds a likely candidate that's an FSBO, and negotiations begin. What circumstance is required for Randall to receive the finder's fee?

carma and trent must pay the finders fee to randalls broker

You have an agency agreement with Sam to list his property for sale. Because of this, what is Sam's relationship to you?

client

When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?

competition

which economic principle is related to supply and demand

competition

Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built homes is the ______.

cost approach

Javier represents Marcus, who's selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben's relationship to Javier?

customer

Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who's interested in Gertrude's property. What restrictions are in place for Homestead Realty?

homestead may represent the buyer must disclose material facts about the property and must maintain gertudes confidentiality

seth is a licensee working for a buyer, britney. britney wants to make sure the seller accepts her offer on a charming cape cod, so she tells seth she wants to make a full-price, non-contingent offer right away how should seth respond

i highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house.

aamiras seller tom just received the news that his buyer are walking away from the sale. they weren't willing to proceed after they saw the inspection report. neither amire nor tom has requested a copy of the report. whats the most likely reason for that?

if they see the report they'll be required to disclose any adverse findings

to best prevent risk associated with licensee non-compliance with real estate- related federal regulations brokerage firms should do which of the following

include a review of related federal legislation in the policies and procedures manual and provide appropriate training

The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.

inverse condemnation

what does a municipality do to verify that new construction meets building codes

issue building permits

what impact does the clean water act have on wetlands use

it governs the use, maintenance, and development of wetlands

Camille has a listing for a townhome, and appoints Ivy as her sub-agent. Ivy brings a buyer customer to the transaction, and the buyer purchases Camille's listing. What's true about the agency relationships in this situation?

ivy is camilles sub-agent and owes loyalty to the seller

Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he's past the required beneficiary age of 18. What type of trust is this?

living trust

which type of antitrust violation occurs when real estate firms agree to divide their market so they dont compete with one another

market allocation

Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who's 16. Which of these must occur to make this transfer legal?

meg must sign the deed and have her signature acknowledged

Marty a land surveyor was called out to survey a property after doing some research he located the legal description for the property in question now if he could just find the point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east of the oak tree next to bear creek. what type of legal description i smarty working for?

metes and bounds

which legal description method uses compass headings and directions

metes and bounds

which one of these statements by a licensee to a client crosses the line into the unauthorized practice of law

mist couples take ownership of property as. joint tenants so thats what id advice

taxes, insurance, and maintenance are property expenses that are sometimes covered in a tenant's lease payment. these are collectively referred to as the

nets

Select the situation that correctly represents a true conflict of fiduciary duties.

nikkis seller client has instructed her not to present offers that are less than the listing price. this is a conflict of nikkis duty of disclosure which requires her to present all offers and her duty of obedience

what are the main benefits to veterans of the VA-guaranteed loan program

no down payment no mortgage insurance, and no prepayment penalty

Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way, the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount, and her mother transfers the deed to Mary. What is happening in this scenario?

novation

What's the key difference between assignment and novation of a contract?

novation releases the original party from all obligations while assignment does not

Bart is under contract with Steven to purchase Steven's home. Bart is having second thoughts and intentionally misses a couple of contingency deadlines. Which of these statements is true?

one of stevens options is to move forward with the contract

which one of the following commercial property managers duties requires that they keep the property and facilities in good condition and schedule and budget for needed repairs and upkeep work?

oversee the maintenance of buildings on the property

when a contract has been breached the wronged party attempt to sue for punitive damages which are

payments in excess of any compensatory damages

Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact?

prepare an agency agreement or continue to assist carly with the purchase

What's a typical prepaid item that will go into a seller's credit column and a buyer's debit column on a closing statement?

property taxes

which of the following scenarios is an example of corrective maintenance that may be overseen by a property manager?

replacing a section of roof after a leak

which of the following is a buyers agents task or duty

representing the buyers interest

which of these is an example of practicing within your area of competence

researching the property tax amount that a client will pay on the home hes purchasing

Homebuyer Nancy has made an offer to purchase a house and has plans to schedule a home inspection. How can her agent assist her in relation to the home inspection?

review the inspection report with her and discuss options

Under which of these circumstances might a licensee get paid after an agency agreement terminates

robs listing agreement with his seller client carmine terminated the agreement included a 30-day protection clause. five days after the agreement terminated, carmine sold the property to a family who had looked at the house during the listing period

In full seller disclosure states, whose responsibility is it to fully disclose all items on a seller disclosure form and any known material defects not listed on the form

seller

which of the following is an example of a fixture that is real property

shelves attached to the wall with brackets

Which form of co-ownership is a persons ownership inheritable

tenancy in common

which of these is the best reason for a brokerage firm to ensure that all associated licensees comply with federal real estate related regulations

the broker and brokerage firm are responsible for supervising associated licensees and may be vicariously liable if licensees dont comply

What is an encumbrance?

A defect on a title that can be monetary or physical

what does the CAN-SPAM Act stand for

Controlling the Assault of Non-Solicited Pornography and Marketing Act

Juan has finalized his comparables and is ready to determine a property's appraised value. How does he do this?

he reviews his process and places more weight on the most similar comparables that he believes to be the most valid

which of these is NOT an example of price fixing

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

which of these is an example of conversion funds

Monica used funds from the firm's trust account to pay her firm's rent.

in which of the following situations can the state use its power of escheat

Nadine died with no heirs and no debt

Jansen and his listing agent just left the closing on Jansen's house. What kind of notice does Jansen, his agent, the buyer, and the buyer's agent have regarding the sale of Jansen's house?

actual notice

what does the federal trade commission regulate

advertising

what information about a property is the licensee required to disclose potential buyers

any material adverse information that the licensee has actual knowledge of concerning the physical condition of the property

what type of value is of interest to taxing authorities

assessed value

Lorenzo just received a prestigious fellowship to study abroad for a year! However, he'd just signed a one-year lease on his apartment. With the landlord's permission, he substituted his sister's name on the lease, and Lorenzo's sister will pay rent directly to the landlord. Lorenzo may still be liable for the rent if she misses any payments. This is an example of ______.

assignment

Belinda's client asked her to draft an addendum containing complicated terms that even Belinda doesn't fully understand. Belinda should ______.

avoid unauthorized practice of law

which of the following is the most serious consequence of treating a customer as a client

breaching your duty to your actual client

what economic principle is related to a property's most profitable use that is both legal and economically feasible

highest and best use

buyers tony and sylvia know the postal address of the property theyre purchasing but are wondering about the legal descriptions of the property. where is the most likely place to find the legal description

deed

through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee

deed

Zoe and Matt just purchased a home in the Shady Acres subdivision. While replacing some windows, they learned that all shutters facing the street must be either dark blue or dark green. This is an example of a(n) ______.

deed restriction

the truth in lending act requires lenders to make certain __ to consumers

disclosures

whats an upfront charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires

discount point

how do you calculate the monthly rate for annual taxes using a statutory year

divide by 12

the town of peteresville has just decided to restrict density in one area of town that previously allowed a higher density . this is also known as __

downsizing

Fewer buyers in a higher price range would create what kind of pressure on housing prices?

downward

what are two categories of comparison when evaluating comparables to a subject property in the market comparison approach

elements and units

what type of agreement would guarantee payment of commission regardless of who actually sells the property

exclusive right to sell agreement

a seller and a buyer have entered into a sales contract. they're about three weeks into the transaction with several terms of the agreement yet to be met. what type of contract do the parties have?

executory

the clean water act and the clean air act are both what type of regulations

federal

Jarod bought a home in which he has all the rights of ownership, including the right to sell and to convey the property to heirs at his death. What type of fee simple estate is this?

fee simple absolute

your client the harpers live in area B thats adjacent to area C area C was recently downzoned if the harpers believe the rezoning has harmed their property values what can they do

file a claim of inverse condemnation

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

get a low 4.925% APR

Wendell just listed Barb's home. Barb told him that there weren't any easements on the property, and Wendell hasn't seen a copy of the survey. What is Wendell's responsibility relative to the disclosure of any easements?

he only needs to disclose easements if theyre known

your client closed on their property yesterday but you still have some paperwork that you need to deliver to them as soon as possible. under which fiduciary duty are you acting

the duty of accounting

Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened?

the previous owners redeemed the property by paying all mortgage payments and fees

which of these scenarios would require an environmental impact statement

the us national park service plans to build a new visitor center on property owned by the federal government

why did the civil rights act of 1866 fail to have an imediate impact on practice

there was no agency put in place to enforce the laws

which one of the following protects the owner against financial loss if the real estate title has defects

title insurance

in a real estate transaction in which you represents the seller what are your duties to other parties in the transaction

treat them honestly and fairly

Because Shelby has a high prepayment penalty on her high-interest loan, she is ________.

unable to refinance her high interest subprime loan without paying a stiff penalty

When you use a comparative market analysis to calculate a suggested listing price range for a particular property, which of the following actions will you take?

use adjusted prices from comparables and refine a range using active listings expired listings and possibly pending listings

Which factor that influences value considers the property's function?

utility

which of the following can be defined as what a property is worth

value

as part of a sales contract the seller was supposed to provide a copy of the sellers disclosure to the buyer but the seller failed to do so. what type of contract is this

voidable

You're showing your buyers a house that clearly has a second-story addition. What important thing do you need to find out from the sellers?

whether or not the addition was permitted

what happens when your client asks you to do something thats against the law

you must break your duty of obedience

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