Real Estate Course 2

An investor is thinking about buying a $500,000 house to use as a rental property. She has $100,000 saved up for a down payment and will mortgage the remaining $400,000. The annual cash flow is projected to be $25,000. What is the potential return on investment?

25%

Marsha is a broker and uses columnar records for her trust accounts. She uses BRE form 4523 to keep track of each beneficiary or transaction. What other form is she required to use in conjunction with 4523?

4522

The documentary transfer tax is _____ cents for every $500.

55

Which of these is a central element of an antitrust violation?

A contract

To which of the following properties does an agency disclosure form apply?

A four-plex

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

What information is provided to the IRS on Form 1099-S after a real estate closing?

Address or legal description of the property

Helen is a California broker who keeps a trust account for her brokerage. Each month she reviews the trust account records provided to her by her accountant. Which of these records would NOT be part of her review of proper trust fund handling?

All beneficiary journals

Which of the following describes a high-rise building?

Always equipped with elevators

Which of the following precautions can help keep you from being cornered, locked in, or pushed from behind and disabled?

Always make sure you follow a client into a space.

Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur?

An agreement between competing firms to standardize commission rates

The seller net sheet is _______ of closing costs.

An estimate

Which type of buyer representation agreement published by C.A.R. does not include a broker compensation section?

BRNN

In a California real estate transaction, which of these individuals would require a license to act as the escrow agent?

Barbara, an associate broker who works for Zack

In central California, Documentary Transfer Taxes are paid by the ___________.

Buyer and seller

Which of the following agreement terms is typically a standard part of the sales contract?

Buyer's option to purchase a home warranty

Which of the following is a good source for leads on discounted investment properties?

Divorce attorneys

What is one advantage of joining a real estate team within a brokerage?

Doing so allows you to specialize.

For how long must a licensee retain a signed agency disclosure?

For three years

Jerry, a licensee, received a commission check. Where should he deposit those funds?

In his own private account

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.

What types of laws does the corporations code contain?

Laws related to the sale of securities

Who usually represents the lender at a closing?

Lender's attorney

According to RESPA, what must the lender give to the borrower at either the time of loan application or within three days following application?

Loan Estimate

You're a California broker. That means you must reconcile your trust fund accounts ____________.

Monthly

Which of the following are the dimensions required for a handicap-accessible parking space?

Nine feet wide by 18 feet long

Yolanda purchased a house from the Griffins 10 months ago. Shortly after she moved in, the city began work on building a middle school on the empty lot right across the street. She feels that the city's plans must have been known to the Griffins and should have been disclosed, and she really doesn't want to live across the street from a school. Is it too late for her to take legal action against the Griffins?

No, Yolanda can take legal action at any time within two years after taking possession of the property.

A parking lot has 20 total spaces. How many of these spaces must be accessible?

One

Your seller client has listed a beautiful piece of land on the water. You know this property would be a great investment if it were subdivided and developed, but you don't mention the potential investment value to the seller because you want the property for yourself. You also don't market it or present any offers. After several months, you buy the property at a deep discount. What does this make you guilty of?

Passive fraud

You're working with a couple who are in the market for their first home. They're full of questions, and today they're asking about how homeownership will affect their tax burden. Of course, you answer by providing information that's within the scope of your license. Which of these taxes would you mention to your clients as relevant to homeownership?

Possible income tax deductions for prepaid interest on a loan

Before entering into an agency relationship with a consumer, what must a licensee do?

Provide an agency disclosure form and obtain signatures

Sophie has been working hard since she started as a real estate licensee, but the market is slow, and she has yet to complete a single transaction. What strategy could help her find more listings, even though the market is slow?

Reaching out to her sphere

How often are audits conducted on brokerage firm trust account records?

Routinely

Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?

Statute of frauds

What type of lease gives the lender the power to evict tenants when a building owner doesn't make the mortgage payments?

Subordinate lease

Who is responsible for obtaining a home inspection?

The buyer

The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels' depreciation basis calculations?

The loan origination and lender fees that they paid at closing

What is financial risk?

The risk that is directly related to leverage

Which one of the following elements does a valid option contract contain?

The sales price of the property or the way in which the price will be determined

Moneys given for purchase deposits are ______.

Trust funds

Does the sale of land that includes a permanent structure require notification of the Internal Revenue Service through Form 1099-S?

Yes

Your buyer clients Sylvie and Daryl reviewed their inspection report and decided that they would address small repairs themselves, but they want the seller to have regrading done to direct water away from the house. What is your responsibility at this point?

You need to communicate to the listing agent that the buyers are requesting regrading.

If a seller removes a building from the land prior to sale of the property, the seller may be responsible for paying _______ on that building

sales tax