unit 2 The CE SHOP real estate exams
Arnie made an offer on a home on April 1. The seller received it on April 2 and countered the offer on April 3. Arnie countered on April 4, and the seller agreed to Arnie's counter on April 5. Closing is scheduled for May 30. What's the effective date of a contract? -April 1 -April 3 -April 5 -May 30
April 5
In a sales transaction, what provides proof that the lender will actually fund the loan? -Appraisal -Final loan approval -Preapproval -Prequalification
Final loan approval **The final loan approval occurs when funding is imminent. Funding usually occurs within 24 to 48 hours after approval.
The NAR board has called Clara as a witness to an ethics investigation. She should be prepared to ______. -Hire a lawyer -Plead the 5th Amendment -Respond to questions by professional standards panel members -Testify in front of a judge and jury
Respond to questions by professional standards panel members
The Hendersons are having a very difficult time finding a property that meets their needs. What is a way they can find off-market listings? -Ask a real estate agent to poll her sphere of influence. -Ask a real estate agent to search the MLS. -Search homebuying websites. -Visit real estate brokerages to see what properties they are advertising.
Ask a real estate agent to poll her sphere of influence. **Off-market listings are also known as pocket listings. Only the seller, the listing agent, and individuals the seller and listing agent have informed know the property is for sale. It is not posted on the MLS, brokerage websites, or homebuying websites.
South Carolina real estate broker James is explaining the Broker Disclaimer portion of the sales contract to his buyers. He says, "____________." -As a broker, I am responsible for title and zoning, but not property condition -As a broker, I give no warranty about zoning or property condition -As a broker, I warranty property condition, but not zoning -Brokers disclaim all responsibility for the transaction
As a broker, I give no warranty about zoning or property condition
Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole? Contribution Impact on value Plottage Progression
Contribution
South Carolina broker-in-charge Brady is working with a new licensee. What does he tell him about the residential sales contract? -"The sales contract from the South Carolina Real Estate Commission must be used in the state." -"The sales contract is the same, whether for a residential or commercial property." -"While there's not one standard sales contract form in South Carolina, our firm has one we use exclusively." -"You may use any sales contract you like."
"While there's not one standard sales contract form in South Carolina, our firm has one we use exclusively." **South Carolina doesn't require one standard form for residential sales contracts. Any contract used must include the required elements, and must be created by an attorney. Your broker-in-charge will tell you which one your brokerage uses.
Simi is a buyer's agent, and she'll receive a split of the commission paid from the sale of Tanner's listing. The property sold for $425,000. The total commission paid from the sale is 6% split evenly between the buyer's and seller's brokerages. Simi has an agreement to give her broker that 20% of the commission she receives. How much will Simi be paid from this sale? $10,200 $12,750 $20,400 $25,500
$10,200 **The total commission paid is $25,500 ($425,000 × .06). Half of this is paid to Simi's brokerage ($12,750). Of that, Simi gets 80% ($10,200)
What percentage of profit would the seller make if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $200,599? Round your answer to the nearest percent. 138% 16% 23% 293%
23% **Add the costs of the lot and the house together to get the total cost ($163,000). Next, subtract the sales price from the total cost to get the amount of profit ($37,599). Finally, divide the total cost by the profit amount ($37,599 ÷ $163,000).
A property is 50 square yards. How many square feet is this? 150 square feet 27 square feet 450 square feet Nine square feet
450 square feet **One square yard is equal to nine square feet. Fifty square yards is equal to 450 square feet.
Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage? 2,200 square feet 3,000 square feet 750 square feet 850 square feet
850 square feet **Find the area of each room to get its square footage, then add the square footage of all four rooms. Kitchen = 150 sq. ft.; living/dining = 500 sq. ft.; office = 100 sq. ft.; and bedroom = 100 sq. ft. = 850 square feet.
The NAR Code of Ethics is considered to be _______________. -A fundamental guideline for ethical practice -An optional guideline for troublesome agents -Federal law -State law
A fundamental guideline for ethical practice
For what properties are wood infestation reports applicable in a South Carolina sales transaction? -All new construction residential homes -All previously occupied residential homes -Commercial and multi-family properties -Multi-family and single-family homes that have never been occupied
All previously occupied residential homes **The buyer of a previously occupied South Carolina home may make the purchase contingent on a satisfactory wood inspection report.
Which of the following information can be found in a subject property's former listing on the MLS? -Amenities at time of listing -Anticipated property taxes -Current appraised value -Current square footage
Amenities at time of listing **Historical listing data gives a snapshot of what a property once was and how it was marketed. This can be compared to current data from other sources to see how the property may have changed over time.
What is dynamic risk? -An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism -An uninsurable business risk resulting from economic, tax, and market changes -The risk that an investor cannot secure financing at an affordable rate -The risk that is directly related to leverage
An uninsurable business risk resulting from economic, tax, and market changes
Joaquim analyzed a potential opportunity and determined that if he invested $250,000 in the commercial property, he'd likely see a return of 12% on this investment. After several years, Joaquim is seeing a measly 2% return. What type of risk did he fall victim to? Business risk Capital risk Financial Risk Leverage Risk
Business Risk
Marcie bought a duplex, lived in one half, and rented out the other half. This is an example of what type of investing? Buy and hold Fix and flip Passive Wholesaling
Buy and hold
Which of the following elements of the NAR Code of Ethics are used to clarify the articles and support local boards during hearings on ethics violations? -Articles -Case interpretations -Case law -Standards of practice
Case interpretations
Camille is a young, ambitious professional who works downtown. Which of the following new construction properties would probably be of most interest to her? -City condo -Country estate -Three-bedroom, two-bathroom home in the suburbs -Three-bedroom, two-bathroom home near mass transit
City condo **Urban professionals tend to want to be near their work. If Camille had a family and school concerns, she might prefer a home in the suburbs.
Adjustments to closing costs are prorated as of what date? -Closing date -Date earnest money is received -Date of buyer possession -Effective date of contract
Closing date
The Broker's Compensation section of a South Carolina sales contract says that ______________. -Closing proceeds may be used to pay the brokers' commission -Earnest money may be retained to pay broker commission -If broker commission is in dispute, the parties must resolve the situation within 30 days -In the event of a dispute between the parties, the brokers waive their commission
Closing proceeds may be used to pay the brokers' commission
The principle of ______ says that value is created and maintained when the characteristics of a property fit in with its surroundings. Anticipation Conformity Contribution Substitution
Conformity
Price levels are an indicator of _______. Demand Inventory rates New building permits Supply
Demand
In South Carolina, the parties agree in the sales contract to a repair procedure unless what document is attached? -Amendment to Repair Procedure -Due Diligence Addendum -Seller Disclosure Statement -Waiver of Repair Procedure
Due Diligence Addendum **The parties agree to a repair procedure unless a Due Diligence Addendum is agreed upon and made part of the sales contract.
Not jumping to conclusions and considering the facts of the situation best describes which step for handling ethical dilemmas? -Decide what action to take. -Determine whether an ethical dilemma exists. -Evaluate the situation. -Explore the ethical choices.
Evaluate the situation.
Asking yourself who's involved in the ethical dilemma, how they're impacted, and what created the situation will help you get through which step for handling ethical dilemmas? -Decide what action to take. -Determine whether an ethical dilemma exists. -Evaluate the situation. -Explore the ethical choices.
Evaluate the situation. **Evaluating the situation means looking at the facts, considering who's involved, and how they're impacted. Don't jump to conclusions!
You represent a buyer of a South Carolina home. A tree falls on the home, causing significant damage. Your buyer wants to terminate. How long does your buyer have to notify the seller of the intent to terminate? 10 days 24 hours Five business days Two business days
Five business days **Parties have five business days after notice of damage to deliver a notice of termination to the other party. Without such notice, they agree to proceed according to the contract, and the seller is responsible for repairs.
Which of these would be considered a submarket within the investment strategy segment? Fix and flip Industrial Residential Rural
Fix and flip **Investors generally specialize in a particular combination of segment submarkets, and fix-and-flip is one of the submarkets within the investment strategy segment.
Frank failed to notify the seller of deficiencies found during the inspection until one day after the repair procedure inspection date. What will happen now? -Frank has bought the property as-is. -Frank must notify the seller within one day of any deficiencies. -Frank must terminate and receive a refund of his earnest money. -The seller may terminate and receive Frank's earnest money.
Frank must notify the seller within one day of any deficiencies. **The buyer must deliver notice to the seller in writing of specific defects or deficiencies found no later than two business days after the repair procedure inspection completion date.
Many investors like the real estate market for its ________, with the potential for bottom-line yields of 20% or more. High yields Leveraging opportunities Personal control Tax flexibility
High yields
Why should you know when the seller can vacate the property? -If a buyer wants to close before the seller can vacate, the seller may need to rent it back from the buyer. -You'll need to know when you can have the property staged. -You'll want the house empty for showings. -You'll want to schedule the closing during the seller's occupancy.
If a buyer wants to close before the seller can vacate, the seller may need to rent it back from the buyer. **The timing of vacating an occupied property is important when marketing to buyers who may want to move in before the seller's ready to move out. Continue to Unit 2: Listing Agreements and Disclosures in South Carolina Return to Unit 1: Basics of Working with Sellers View Exam Results
Which of the following actions is an example of discrimination based on religion? -Including the phrase "Two blocks from St. Martin's Cathedral" in an MLS listing -Saying "God bless you" when someone sneezes -Suggesting buyers attend a meeting of the local school board to learn more about the school district -Suggesting sellers remove personal objects from the walls, such as family photos, crucifixes, and children's artwork, before showings
Including the phrase "Two blocks from St. Martin's Cathedral" in an MLS listing **Avoid making references in your MLS listings that would appeal or drive away members of a protected class. Any time you start talking about specific groups, you're treading on thin ice with fair housing law.
What market indicator is expressed as the number of months it takes to sell homes at the current rate of sales? Inventory rates Price levels Sales volume Vacancy rates
Inventory rates
What is an advantage to using mediation as a problem-solving tool in a contract dispute? -It costs so much that the parties often come to terms without utilizing it so they don't have to pay for it. -It is performed in an open setting so that anyone can sit in and know about the decisions that are made. -It offers a win-win solution because both parties come out with satisfactory results. -It slows down the contract timeline long enough to give the parties time to calm down.
It offers a win-win solution because both parties come out with satisfactory results.
What happens to a seller's flood insurance in a South Carolina sales transaction? -It continues in the seller's name until the buyer has "aged" in the property for a period of one year with no claims. -It's assigned to the buyer at closing. -It's cancelled at closing. -The lender is written in as a co-insurer at closing.
It's assigned to the buyer at closing. **Flood insurance, if required by the buyer's lender or at buyer's option, is assigned to the buyer with the carrier's permission, and the premium is prorated to closing.
Janelle, a buyer of a previously occupied South Carolina home, is making her purchase contingent on a satisfactory wood inspection report. Who must order and pay for that report? -It's negotiable -Janelle -The lender -The seller
It's negotiable **The buyer of a previously occupied South Carolina home may make the purchase contingent on a satisfactory wood inspection report. Either the buyer or seller may pay for the report.
In a South Carolina real estate transaction, who's responsible for paying the transaction costs? -It's negotiable -The buyer -The lender and broker in charge -The seller
It's negotiable **Under the terms of the South Carolina contract, certain provisions, such as who pays the transaction costs and whether or not the seller agrees to pay the buyer's transaction costs, are negotiable.
Which of the following is a true statement about home warranty coverage in a South Carolina sales transaction? -It's mandatory and paid by the seller. -It's optional, and who pays for it is negotiable. -It's optional, but if desired, the buyer must pay for it. -It's optional, but if the buyer requests it, the seller must pay for it.
It's optional, and who pays for it is negotiable. **Either party may pay for this optional coverage, as stipulated in the sales contract.
Physical possibility, financial feasibility, maximum profitability, and ______ are all considerations when determining highest and best use. Ability to be leveraged Legal permissibility Liquidity Rebuilding cost
Legal permissibility **To determine highest and best use, appraisers or investors will consider legal permissibility, physical possibility, financial feasibility, and maximum profitability.
Because real estate offers __________, investors can sometimes make a 100% return on their investment. Appreciation Leveraging opportunities Personal control Tax flexibility
Leveraging opportunities
Which of the following is a passive type of real estate investment? Buy and hold Fix and flip Limited partnership Wholesale
Limited partnership **Limited partners are passive investors who invest funds, but don't get involved in the day-to-day activities related to the business.
Chip received notice that the South Carolina home he was in the process of buying was damaged in a flood. Ten days later, he told the seller he wanted to terminate. Can he do this? -No, because he missed the deadline to terminate. -No, buyers have no right to terminate based on damage. -Yes, if the damage is severe. -Yes, unless the seller can make repairs prior to closing.
No, because he missed the deadline to terminate. **Parties have five business days after notice of damage to deliver a notice of termination to the other party. Without such notice, they agree to proceed according to the contract, and the seller is to be responsible for repairs.
If an appraisal contingency is in place, what happens when a property appraises higher than the agreed-upon sales price? -Nothing will happen. -The lender will lend the larger amount, whether it is the appraised value or the sales price. -The sales price changes to the appraised value. -The seller may terminate and remarket the property.
Nothing will happen.
In a South Carolina sales transaction, what signifies "notice"? -Both parties notifying the other of an event or decision -Both parties' signatures -Both parties' signatures and dates -One party notifying the other party of an event or decision
One party notifying the other party of an event or decision **Notice is one party notifying the other party of some event or decision regarding the sales transaction.
According to Article 15 of the NAR Code of Ethics, REALTORS® may not knowingly or recklessly make false or misleading statements about ________. -Anything, ever -Other real estate professionals, their businesses, or their business practices -The industry or market conditions -Their own competencies and experience levels
Other real estate professionals, their businesses, or their business practices **While REALTORS® are prohibited from making misleading statements about their competency or the industry, Article 15 of the NAR code specifically addresses the ethical treatment of other REALTORS®.
For both homeowners and real estate investors, buying real estate is considered a good way to ______. Develop an investment portfolio Immediately increase a credit rating Make a quick profit Preserve capital
Preserve capital
The buyer of a/an_________ South Carolina home may make the purchase contingent on a satisfactory wood inspection report. -Multi-family new -New -Previously occupied -Vacant
Previously occupied
When a property's value is dropping because the neighboring property's yard is filled with trash, it's an example of ______. Depreciation Progression Regression Substitution
Regression **When the value of a higher-quality property is reduced by an adjacent lower-quality property, this is called regression.
Which of these describes the method for determining the indicated value of a subject property when a licensee performs a market analysis? -List price of subject property ± adjustments -Original sales price of comparable ± equity -Sales price of comparable ± adjustments -Sales price of comparable ± economic index
Sales price of comparable ± adjustments
Which market indicator, usually found in a local MLS, shows how many properties are selling in a given area? Days on market Inventory rate Price levels Sales volume
Sales volume
You blogged about a new development site across town, and someone posted this public comment: "Don't buy in this development! They'll cheat you out of everything and you'll never see your money again!" As the blog's owner, you ________. -Can choose to delete or keep the comment, depending on whether or not you want to encourage people to buy properties in the development -Hold no responsibility for what someone else posts online -Should delete the comment -Should post a disclaimer immediately beneath the comment that says you do not support or agree with the comment
Should delete the comment **You must remove false or misleading information if someone else posts it on your site. An inflammatory comment like this may have some element of truth, but at the very least it's exaggerated, and therefore misleading.
Tom owns a construction company in a small southern town. Although national housing statistics have changed dramatically, his business hasn't increased or decreased at all. Which characteristic of the real estate market is described here? -Highly influenced by governmental policy -Indestructible -Slow to respond -Unique
Slow to respond
Under which of the following real estate submarkets would an investment in public storage facilities fall? -Commercial -Industrial -Residential -Special use
Special use
Which of the following elements of the NAR Code of Ethics support, interpret, and amplify the articles? -Acknowledgements -Case interpretations -Case law -Standards of practice
Standards of practice
Deducting the costs of maintaining and operating an income property provides a(n) _______ that's attractive to many real estate investors. -Credit boost -Increase in equity -Profit -Tax shelter
TAX SHELTER
When contracted terms of a South Carolina transaction are scheduled to be completed after closing, what happens when the transaction closes? -The parties are still under obligation to satisfy the terms of the contract. -The parties may not enforce any terms after closing. -The parties must litigate to satisfy the terms. -The terms are void.
The parties are still under obligation to satisfy the terms of the contract. **The Survival section of the sales contract says that if any contracted terms must be performed after closing, they survive closing and remain binding upon the parties.
Without a buyer agency agreement in place, which party does the agent who's assisting the buyer represent? -No one -The agent -The buyer -The seller
The seller **If there is no agency agreement in place, the agent who's assisting the buyer represents the seller.
Who does the agent assisting the buyer in a transaction represent if there's no buyer agency agreement? -No one -The buyer in a sub-agency capacity -The customer -The seller
The seller **Without a buyer agency agreement in place, the agent assisting the buyer actually represents and owes loyalty to the seller.
If a buyer wants to write an offer and asks for your help but doesn't want to sign an agency agreement with you, who do you represent? -Both the buyer and the seller -No one -The buyer -The seller
The seller **Without an agency agreement with the buyer, you'd represent the seller.
Which of the following is a true statement about unimproved land? -A portion of the down payment must be applied to improving the land. -Because banks are required to charge lower interest rates for unimproved land, they require a larger down payment. -There's always a shortage of unimproved land. -There's more risk in financing unimproved land than in financing improved land.
There's more risk in financing unimproved land than in financing improved land.
Why might some agents work for buyers without ever having met them? -It's the most effective use of their time. -They believe they'll be able to get the buyer to commit to an agency agreement later. -They don't particularly like people. -They're afraid to turn down any business.
They're afraid to turn down any business. **Some agents are willing to work for buyers without an agency agreement and without ensuring buyer loyalty. This can be a waste of time.
From a real estate licensee's standpoint, what's the purpose of qualifying buyers before working with them? -To determine their financial wherewithal -To determine their readiness to purchase and make sure they're not already working with another agent -To learn if you have things in common with them -To pre-qualify them for a loan
To determine their readiness to purchase and make sure they're not already working with another agent **The purpose of qualifying buyers is to determine their readiness to work with you, and their readiness to purchase. It's also important to establish that they're not already exclusively represented by another agent.
Notice forms are ________, since they consist of one party giving notice of something to the other party. -Bilateral -Binding -Unilateral -Void
Unilateral **Notice forms are unilateral. They consist of one party giving a notice to another party. They're effective upon delivery to the other party or the other party's broker.
What does the underwriting step of loan processing typically involve? -Property inspection -Title search -Verification of the borrower's financial situation -Verification of the seller's financial situation
Verification of the borrower's financial situation **After the information on a loan application has been verified, the value of the property confirmed, and the title search completed, the loan is ready to be underwritten.
When performing a market analysis, what do you do with the adjusted sales prices of comparables to determine market value of the subject property? -Average them. -Select the highest sales price if the market is hot, and the lowest if it's cold. -Weigh the comparable with the fewest adjustments to sales price most heavily. -Weigh the comparable with the most adjustments to sales price most heavily
Weigh the comparable with the fewest adjustments to sales price most heavily.
Jamie, a South Carolina licensee, is representing a party in a real estate transaction. Her side must provide notice to the opposing side. When is notice effective? -When delivered -When initialed and dated by both parties -When received by the opposing party -When signed by the notifying party
When delivered **When notice is required in reference to a sales transaction, it can be provided by brokers by electronic or hard copy means, and will be effective when delivered.
Under what circumstances are pocket listings more prevalent? -When inventory is high -When inventory is low -When the market is cold -When there is greater demand for them
When inventory is low **Low inventory is the breeding ground for pocket listings.
Carmen is the listing agent on a 15-year-old, 15-unit apartment building. She's updated two units, but the rest have their original design and appliances. When advertising the property, she described the building as having "most units equipped with modern fixtures and appliances." Henry made an offer on the property after only seeing the updated units. Later, upon closer inspection, he found that those were the only apartments with updated features. Did Carmen do anything wrong? -No, Henry could've asked to see all the apartments. -No, Henry should've brought an inspector with him. -Yes, Carmen's advertisement exaggerated the property's "modern" conditions. -Yes, Carmen shouldn't have accepted Henry's offer without an inspection first.
Yes, Carmen's advertisement exaggerated the property's "modern" conditions. **Carmen's description of the building as having "most units equipped with modern furnishings and appliances" stretches the truth, since only four of the 15 units are updated. Advertising must be truthful.
May a South Carolina buyer waive the right to receive the seller's property condition disclosure report? -No, under no circumstances -Yes, if the buyer won't be occupying the property -Yes, if the property is valued at less than $250,000 -Yes, under all circumstances
Yes, under all circumstances **A buyer may waive this right, whether occupying the property or not, and no matter its value.
You're a South Carolina real estate licensee who just inherited a windfall, and you've decided to purchase an investment property. Must you disclose your license status on the sales contract? -No, because it's an investment property -Not to the seller, but to the listing agent -Yes, because it's an investment property -Yes, you must disclose this on page one of the sales contract
Yes, you must disclose this on page one of the sales contract **If a South Carolina licensee is a party to a sales contract, this must be disclosed on page one of the contract in bold, underlined, all-caps wording.
The risk that is directly related to leverage is called ______ risk. Business Capital Financial Leverage
financial
Which of the following would most likely be used to determine this value? Effective gross income Gross income multiplier Gross rent multiplier
gross rent multiplier **GRM is used for income-producing properties of four or fewer units. Properties with five or more units use GIM.
If a buyer waives the right to receive seller disclosures, has the buyer waived the right to request repairs? -No -No, if the buyer is a home inspector, the buyer may request repairs even after waiving the right to receive disclosures -Yes, but only if the buyer also waives the inspection and appraisal contingency -Yes, under all circumstances
no **The buyer may waive the disclosure but it's still recommended that a buyer have professional inspections completed, and may request repairs.
Accident liability, fire, theft, and vandalism are types of _______ risk. Capital Dynamic Environmental Static
static **Static risks are those business risks that could potentially be lessened with insurance.
Economic, tax, and market changes are types of _______ risk. Capital Dynamic Environmental Static
Dynamic **Dynamic risks are those business risks that cannot be lessened with insurance. This includes economic, tax, and market changes.
What's meant by "minimum ethical standards"? -Commission levels should not ethically rise above the minimum standards. -Commissions set below these standards would be unethical. -Licensees should strive to act at least at that level, and more if possible. -Licensees should strive to do no more than the minimum required.
Licensees should strive to act at least at that level, and more if possible. **Minimum expectations are just that. Licensees should strive to rise above the minimum required.
A lender requests an appraisal of a property under foreclosure. What type of value is the lender most likely to be interested in? Going-concern value Insured value Investment value Liquidation value
Liquidation value
Casey was found to be in violation of the NAR Code of Ethics. What penalties could the NAR hand down against him? -A formal reprimand, but not mandatory education -Mandatory educational seminar attendance, but nothing else -Mandatory education, NAR suspension, or reprimand -NAR membership suspension, but not suspension
Mandatory education, NAR suspension, or reprimand
______ is among your safest risk management tools, so always try to inform all parties of any issues in writing and in a timely manner. -Appraisal -Commission insurance policy -Disclosure -Good showing
Disclosure
Why are property developers required to pay special attention to issues regarding density, infrastructure, and traffic patterns? -To appease environmental activists -To conform with scientific studies of good building standards -To ensure consistency with a city's general plan -To make a property marketable
To ensure consistency with a city's general plan
What type of buyer tends to look for properties with less space than their existing home, but that will still offer them a similar quality of living? -First-time buyer -Retiree -Trade-down buyer -Trade-up buyer
Trade-down buyer **want to maintain a similar quality of living as their existing home.
What's stipulated in the Trust Account Interest/Charitable Contribution of the South Carolina sales contract? -How much of the sales proceeds the parties want to commit to charitable causes -Whether money entrusted to brokers in the transaction may be placed in an interest-bearing account -Whether the buyer's earnest money is refundable to the buyer -Whether the parties require their brokers to earmark a portion of their commission for charity
Whether money entrusted to brokers in the transaction may be placed in an interest-bearing account **The parties stipulate whether the broker may place deposited earnest monies into an interest-bearing account, and that the broker may retain any such interest and contribute some or all of it to a charitable enterprise.
Which of the following statements is an acceptable phrase to include in an MLS listing? -"Large backyard for the do-it-yourself guy, complete with heated workshop" -"Large backyard the kids and dogs will love" -"Large backyard with ample room for all your outdoor activities" -"Large backyard with heated workshop perfect for a lady's craft room or guy's workshop"
"Large backyard with ample room for all your outdoor activities" **Whenever you start suggesting who would appreciate the feature, you're on thin ice as far as fair housing's concerned, and should check your language. Referring to "outdoor activities" isn't discriminatory.
What does the principle of substitution say? -A buyer won't pay more for a property if a similar property is available at a lower price. -A market analysis can substitute for an appraisal. -Most properties in a given neighborhood are interchangeable. -When performing a market analysis, you can substitute room size for room number.
A buyer won't pay more for a property if a similar property is available at a lower price. **The sales comparison approach uses comparable properties and relies on the principle of substitution, which states that a buyer won't pay more for a property than the amount that a substantially similar property costs.
What is the schedule of exceptions? -A list of items title insurance won't cover -An appraiser's list of unrelated properties -An inspection repair list -An underwriting issue
A list of items title insurance won't cover **The schedule of exceptions on a title insurance policy lists the items that the insurer will not cover.
Martina is buying five acres of unimproved land on which to build a home. The property was part of a large family farm for the last 150 years. Which of the following is true? -A substantially larger down payment will be required than if there were structures on the land. -Martina can continue to enjoy the benefits of the agricultural exemption after she builds a home on the property. -Martina can expect a much lower interest rate to finance the property. -Martina must pay cash for the purchase.
A substantially larger down payment will be required than if there were structures on the land. **A larger down payment is usually required for unimproved land. This helps to offset lender risk.
When using the farming approach, affinity is a key factor when identifying a neighborhood. Which statement best describes affinity? -An area that is not currently farmed by another licensee -An area that the licensee likes -An area with a fair amount of listings ‒ not too many, not too few -An area with a variety or home styles, sizes, features, price points, amenities, buyers, etc.
An area that the licensee likes **Affinity is important when choosing a neighborhood. A licensee should genuinely like the area where she intends to work.
Mort was trying to purchase a South Carolina home for $210,000, but the appraiser's report stated that the home only had a value of $205,000. Mort has put $3,000 down as earnest money. What portion of the sales contract protects his earnest money in this situation? -Appraisal contingency -Due diligence contingency -Financing contingency -Transaction costs contingency
Appraisal contingency **says that the purchase is conditioned upon the property being valued according to the purchase price or higher. If the seller refuses to reduce the price and the buyer chooses to terminate, the earnest money is returned to the buyer.
Regarding comparables, what does the Rule of Three say? -At least three comparables should be used. -Comparables should be no more than three blocks away. -Comparables should have be located no more than three miles apart. -No more than three comparables should be selected.
At least three comparables should be used.
Danny is buying Rudy's South Carolina property. A special assessment will apply after closing. Who's responsible for paying this? -Danny -Danny and Rudy -Rudy -The closing attorney or lender
Danny **The sellers are responsible for any special assessments applied before closing, and the buyers are responsible for any that are applied after closing.
What do investors call an investment in vacant land? -Cash drain -Dead money -Empty pockets -Waste of cash
Dead money **Investors call vacant land "dead money" because it doesn't produce an income. The longer a vacant piece of land is held, the more potential income is lost—income that could be making more income and increasing investment potential.
Mortimer is selling his South Carolina home. Which of the following is true about the Wood Infestation Report? -Either Mortimer or the buyer may obtain the report within 30 days before closing. -Mortimer must obtain the report within 30 days after closing. -The buyer may obtain the report within 30 days before or after closing. -The buyer must obtain the report within 30 days before closing.
Either Mortimer or the buyer may obtain the report within 30 days before closing. **As long as the Wood Infestation Report (regarding termites and other insect activity/damage) is obtained within 30 days before closing, either the buyer or seller can request it, based on what they agreed to in the sales contract.
A rehabilitation loan is a loan that ______. -Borrowers can take to stall foreclosure -Encompasses repair or remodeling costs -Is available to borrowers who've recently cleaned up their credit -Pays off a junior mortgage
Encompasses repair or remodeling costs **Owner-occupied buyers may be able to obtain a Federal Housing Administration 203(k) rehabilitation loan (also called a renovation loan) for properties they wish to purchase that require major work.
Which one of the following tasks must licensees perform for seller clients? -Dictate the listing price of the property. -Drive the sellers around to show them other properties that are for sale in their neighborhood. -Ensure that the buyer's earnest money is deposited. -Show the sellers how they can market their property.
Ensure that the buyer's earnest money is deposited. **A licensee must ensure the collection of the earnest money deposit from the buyer. Earnest money may be used as liquidated damages by the seller in the event of buyer default, so it's in the seller's best interest to ensure it's been deposited.
Lily is getting ready for an NAR ethics hearing. She should be prepared to ______. -Give a concise presentation -Give a long and detailed presentation -Give background, including office gossip -Provide opinion and conjecture
Give a concise presentation
Avery obtained a home loan from Happy-to-Lend Bank. He can no longer afford to pay his mortgage, but he wants to avoid foreclosure, so he listed it with Campbell Realty to help him sell it for less than he owes. He receives an offer from a buyer. Whose consent does Avery need to complete the sale? -Happy-to-Lend Bank -His broker's -The buyer's agent -The foreclosure court
Happy-to-Lend Bank
In contrast to land that has buildings on it, vacant land is _______. -Easier to find -Harder to finance -Less expensive to finance -More expensive to purchase
Harder to finance
In a South Carolina sales contract, the parties generally agree upon a/an ________ procedure unless a Due Diligence Addendum is agreed to and made part of the contract. -Contingency -Finance -Inspection -Repair
Repair **The parties agree upon a repair procedure, which includes a deadline for inspections.
________ have a fixed income, but they may have large down payments from selling prior homes. Accessible properties with little to no maintenance tend to be attractive to these buyers. -First-time buyers -Retirees -Trade-down buyers -Trade-up buyers
Retirees **Retirees are similar to trade-down buyers, but there are some key differences. Little to no maintenance and accessibility are key factors for these buyers, who may have fixed incomes, but also have larger down payments from selling their previous homes.
If you find that you've published a statement you genuinely believed true but find is false, in addition to removing the false information, __________. -You owe a $500 fine to the victimized person -You should pretend that you never made the statement -You should publish a clarification in an effort to rectify the misinformation. -You will have your real estate license revoked
You should publish a clarification in an effort to rectify the misinformation.
