BF Practice test 2

A house sells for $47,000 and the buyer made a $2,500 earnest money deposit. The buyer will obtain a 90% loan. The buyer pays four loan discount points and 1% of the sales price for attorney fees, but will receive a prorated tax credit of $400. How much money must the buyer bring to closing?

$47,000 X .90 = $42,300 loan X .04 = $1,692 points. $47,000 X .01 = $470 attorney fees. $47,000 X .10 = $4,700 down payment. $1,692 + $470 + $4,700 = $6,862 - $2,500 deposit - $400 credit of tax. $3,962 cash needed. The correct answer is: $3,962.

After Joseph sold his home, he found that the price he sold it for was 23% more than the original cost of $52,500. What was the selling price of his house?

$52,500 X 123% = $64,575 sale price. Simply add 23% to the original cost. Do this by multiplying by 123% The correct answer is: $64,575.

A salesperson sells property, listed by another broker, for $84,500. If the listing broker is to receive 50% of the 6% commission, how much will the salesperson receive if he earns 40% of his broker's share?

$84,500 (sales price) X 6% = $5,070 total commission. $5,070 X 50%= $2,535 to selling broker. $2,535 X 40% = $1,014 to salesperson. The correct answer is: $1,014.

Sam sold a property to Emma for $225,000. Sam's loan balance was $44,500 with an interest rate of 7%. Emma's conventional loan was at 8% with a 90% loan to value ratio. The taxes for the year were $1250 and the home owner's insurance was $495. Closing took place on October 30th. Based on this information, answer the following question. How much was the intangible tax?

(A) $607.50:The Intangibles Tax is paid on the new loan amount, which we calculate by taking the Sale Price x LTVR = Loan amount, which we round down to the nearest 100 when necessary. $225,000 x 90% LTVR = 202,500 / 500 = 405 x $1.50 = $607.50. The correct answer is: $607.50

What is the amount of transfer tax to be paid by the Sellers?

(B) $140.00. There was no loan assumption, so the taxable amount is the same as the sale price: SP $140,000 / 100 = 1400 x .10 = $140.00 The correct answer is: $140.00

The sales price of the property is $185,000. The new loan is $145,000. How much will the transfer tax be?

(B) $185.00 The Transfer Tax is paid on the taxable amount at 10 cents per hundred or any portion of 100. Sale Price - Loan Assumption = Taxable Amount $185,000 = $185,000 / 100 = 1850 x .10 = $185.00 The correct answer is: $185

Sam sold a property to Emma for $225,000. Sam's loan balance was $44,500 with an interest rate of 7%. Emma's conventional loan was at 8% with a 90% loan to value ratio. The taxes for the year were $1250 and the home owner's insurance was $495. Closing took place on October 30th. Based on this information, answer the following question. How much was the transfer tax?

(B) $225.00: The Transfer tax is paid on the taxable amount. Since there is no loan being assumed, the taxable amount is the Sale price of $225,000 / 100 = 2250 x .10 = $225.00. The correct answer is: $225.00

The maximum amount that may be obtained through the Recovery Fund for the acts of one licensee is:

(C) The maximum amount that may be obtained through the Recovery Fund for the acts of one licensee is $75,000 regardless of the number of transactions involved. It is not $25.000; $45,000 or $1,000,000. The correct answer is: $75,000

A lender requires three (3) months interest be held in a reserve account for all loans made for new construction. If a loan is made for $860,000 at 8-1/2% interest, how much interest will the lender require for the reserve account?

Loan amount = $860,000. Annual Interest = $73,100 (860,000 X 8-1/2%). Monthly Interest = $6,091.67 (73,100 divided by 12). Reserve = $18,275 (6,091.67 X 3). The correct answer is: $18,275.

Which can an unlicensed secretary in a broker's office do?

The correct answer is: Collect rents submitted to her at her desk

Sally bought a piece of property that was currently being rented at $990 per month. Comparable properties in the area are operating on a GRM of 116. Based on the comparable, what is the value of Sally's property?

The formula is GRM = value / rent. In this problem the GRM is 116 and the rent is $990. Therefore, the value = $990 * 116 = $114,840 value. The correct answer is: $114,840.

Which of the following is a Georgia statute related to antitrust?

UDTPA

Donna receives a net income of $550 per month for a property which gives her an annual rate of return of 12.5% on her investment of:

a. $52,800.

A broker has an exclusive-right-to-sell listing, but the owner finds a buyer and sells the property while the listing is still in force. The broker is entitled to:

a. A full commission

Which mortgage clause allows a lender to regain their investment ifa borrower does not pay his payment?

a. Acceleration clause

For tax purposes, the initial cost of an investment property plus the cost of any improvements and minus any deductions to the property represents the investment's?

a. Adjusted basis.

You are building a new structure in an area that is zoned commercial. You cannot open for business yet because you failed the inspection for the construction of the bathroom. You are in violation of:

a. Building codes

When buying a home with a VA loan, the buyer:

a. Could pay more than the appraised value.

Real estate taxes for the calendar year are actually paid on June 30th of each year. If the annual property taxes are $2,580 and a property sells and closes on April 15th, what is the settlement sheet for the proration of taxes?

a. Credit to buyer of $752.50.

A salesperson was holding an open house. Which of the following would NOT be considered as an inducement to buy?

a. Giving away pencils, magnets and balloons of minimal value to everyone

How long does a salesperson have to deliver earnest money to the broker?

a. Immediately

If a person who has the right to make a claim against another, but does NOT do so within a reasonable period of time, a court could determine that the person has lost their right to any claim. The denial of the claim is an application of the theory of:

a. Laches.

Depreciation can be claimed on all of the following property EXCEPT:

a. Land

Sam sold a property to Emma for $225,000. Sam's loan balance was $44,500 with an interest rate of 7%. Emma's conventional loan was at 8% with a 90% loan to value ratio. The taxes for the year were $1250 and the home owner's insurance was $495. Closing took place on October 30th. Based on this information, answer the following question. How much was the accrued interest and to whom was it paid?

a. Lending Institution $259.58

A developer buys a parcel of land that adjoins his property. As a result, the land appreciates in value because the development will be more cost effective. The increased value of the property is referred to as the:

a. Plottage increment.

A mortgage in which payments are made from the mortgagee to the mortgagor is a:

a. Reverse mortgage.

In the event a person was deemed mentally ill but is later found to be free of any mental illness, this person is:

a. Still protected under the Americans with Disabilities Act (ADA)

In Fair Housing discrimination cases, the burden of proof is on the claimant. The claimant must be able to prove:

a. That discrimination occurred.

Carla, through her broker, is representing a buyer. Carla finds a house and the sale is made. Carla will receive her commission from which of the following?

a. The broker that holds her license.

When a buyer purchases property under an installment sales contract, the seller retains:

a. Title to the property

When determining effective gross income, an appraiser subtracts which of the following from gross income?

a. Vacancy rates and bad debts.

If a buyer submits an offer to buy and the offer contains a contingency clause, the resulting contract is:

a. Valid if the contingency is accepted by the seller

At the time of listing, a broker noticed a crack in a wall that was covered by boxes. In showing the property the licensee would:

a. inform the prospective buyer of the crack

If your license is inactive you must:

a. renew every four years to avoid cancellation of the license

Which of the following statements, made by a broker, would NOT be considered puffery?

b. "You can double your money on this property in less that 2 years, I guarantee it"

An investment earns semi-annual interest of $360, and the interest rate is 9% per year. How much money is invested?

b. $8,000.

A husband and wife own property with a mortgage payment due on the first of each month. They are thirty days late in making a payment and receive notice from the lender to make payment within ten days. If they fail to make the payment the entire loan balance becomes payable immediately. Which clause in the mortgage allows the lender the right to take such action?

b. Acceleration clause

To transfer the rights contained in a note, mortgage, or lease from one party to another, by a written instrument is referred to as a(n)

b. Assignment

An agency relationship would most likely exist between which of the following parties?

b. Broker and salesperson

Which of the following appraisal approaches would be most appropriate for a public school?

b. Cost.

A survey is made of Tony's property and it is found that a portion of the neighbor's garage is on his property. Tony is planning to sell his property. This encroachment of the garage onto his lot:

b. Could cause his property to be unmarketable.

To convey possession of property by lease is also referred to as a:

b. Demise.

The difference between a first and second mortgage is that the second mortgage must have a:

b. Different lien position.

An adequate metes and bounds description will have all of the following EXCEPT?

b. Four sides.

Which of the following groups was NOT protected by Title VIII of the 1968 Federal Fair Housing Law as originally written?

b. Handicapped.

All mortgages are?

b. Liens.

A seller's listing expired on August 31st. On August 10th, another broker contacted the seller about listing the property when the current listing expired. Is this legal?

b. No, because the broker contacted the seller prior to the expiration date

Which of the following is the BEST example of a unilateral contract?

b. Option.

LUI scales that relate land, building coverage, and open spaces have become increasingly important in the development of:

b. PUDs.

The Real Estate Settlement Procedures Act:

b. Provides for disclosure of estimated closing costs.

A seller contacted 3 brokers and asked each to suggest the listing price for his property. Broker A said $78,000. Broker B said $79,000. Broker C said $91,000. The seller listed with Broker C and the house later sold for $76,000. Broker C is guilty of violating which of his or her agency responsibilities?

b. Reasonable care

When a real estate broker is retained to perform one specific act for a client, it is known as:

b. Special agency.

Which is true regarding the findings of the Georgia Real Estate Commission?

b. The GREC could publish the name of the licensee and the status of the license

In which of the following can a lender refuse to give a loan?

b. The borrowers do not have the required down payment.

A broker was retiring and placing her license inactive. What BEST describes what happens to her only salesperson?

b. The broker can send the salesperson's license in and the salesperson can associate with another broker within one month

If a deed restriction prohibits a use permitted by zoning, then:

b. The deed restriction controls.

A buyer and seller have entered into a valid contract. Which of the following would have no legal effect on the contract?

b. The seller dies prior to closing.

A person finished a pre-license class on February 1. That person took the state exam on June 1 but failed the exam. By what date must that person pass the exam and apply for license?

b. There is no date to apply by

Which of the following persons executes a trust deed?

b. Trustor.

A unilateral contract is executed:

b. Upon completion of the requested act.

Broker Carr had a 90 day exclusive listing. One month after the listing began, Broker Dole contacted the seller and told him he had a buyer moving in one month after the listing terminates and asked the seller to sign an agreement to take effect after the listing expires. This is:

b. a violation of state law

If an applicant is turned down for a license, the GREC must notify the applicant:

b. of their right to a hearing in accordance with the Georgia Administrative Procedure Act

The 1988 amendment to the Fair Housing Law affords protection on the basis of familial status. Which of the following best defines a family as it applies to this amendment?

c. A household in which there are children under 18 years of age.

Which of the following does a broker NOT have to keep for the GREC auditors?

c. Advertising copy

Which of the following actions by a listing agent would be appropriate?

c. Advise the buyer on the amount of money necessary to assume a loan

Which of the following meets the minimum requirements to be eligible to take the Georgia Real Estate Salesperson's exam?

c. An 18-year-old who meets all the education requirements of the license law.

Which of the following is NOT a form of steering?

c. Attempting to have Caucasian homeowners sell their homes by representing that African Americans are attempting to buy in the neighborhood.

A person has a fee simple ownership of one unit of a multi-story building and pays property taxes on this unit. What type of ownership does this situation describe?

c. Condominium ownership.

Which of the following is NOT specifically protected by fair housing statute?

c. Current drug users.

Three children are named in their father's will to receive his real property. Each is to receive an equal interest. Collectively, they agree to sell the property and split the proceeds. What should they do?

c. File the will for probate.

Which of the following would be an example of downzoning?

c. From single family dwellings to a conservation area

A secretary of a real estate company has passed the state exam but not yet received her license. Which of the following activities could she do?

c. Give another agent in the office an address of a listing

A mother left her house in her will to her two children, Tom and Mary. Each child to receive a 50% interest with rights of survivorship. What type of ownership will Tom and Mary have?

c. Joint tenants.

An out of state owner calls a broker wanting to sell a property for $50,000. The broker knows that the zoning has recently been changed and the property is now worth more. The broker buys it personally and six months later sells it for $75,000. Is this legal?

c. No, the broker must inform the owner of the zoning change and the increased value before purchasing the property from the seller

The right of one party to possess and use real property exclusive of others is:

c. Ownership

A real estate deal fell through with the buyer and seller disputing what to do with the earnest money. The buyer and seller went to court to settle the matter. What should the listing broker do with the earnest money?

c. Pay the earnest money to the court for disposition

If a homeowner is in default on mortgage payments, the lender may foreclose. The right of the mortgagor to regain title by payment of all debts is known as the equity of:

c. Redemption

Interest that is calculated every month based on the remaining loan balance is best referred to as?

c. Simple interest

A salesperson told a buyer that the air conditioner would stay with the house. However, he had NOT checked it out with the seller. After closing, the seller took the air conditioner. Which would happen?

c. The GREC can take disciplinary action or dismiss a complaint if filed

Permission for land use not normally permitted by the zoning classification of the property is a/an:

c. Variance.

If a person feels they have been discriminated against, when must they file a complaint with HUD?

c. Within 1 year.

A husband, wife and mother-in-law were looking at possible houses to buy with a real estate agent. They asked the agent how they should take title to a property. The BEST response for the agent would be:

c. to have them consult an attorney

RESPA prohibits all the following EXCEPT?

d. Allowing the settlement agent to charge a fee for conducting the closing.

What is the advantage to a borrower if he chooses to make bi-weekly mortgage payments instead of monthly payments?

d. Both reduced total interest costs and paying off the loan sooner are advantages.

Regulations that control density and overcrowding are an example of:

d. Bulk zoning.

What type of mortgage would a builder offer to a buyer as an incentive to buy one of his houses?

d. Buy-down mortgage.

An appurtenant easement may be terminated by all of the following EXCEPT:

d. Condemnation of the servient estate through eminent domain.

A salesperson is selling their personal home as a for sale by owner. What must be in the ad?

d. Disclosure that the salesperson is licensed

If a person is alleged to have violated the Civil Rights Act of 1866, the complainant would file suit in which of the following?

d. Federal Court.

After the statutory period has elapsed, what would a person have to do to formally establish clear title through adverse possession?

d. File suit for quiet title

A licensed salesperson, in renting a house the salesperson owns, could advertise in which of the following manners?

d. For rent by owner--Landlord holds a real estate license--541-3567

A broker brought a ready, willing and able minority buyer who signed an offer to buy a house at the listed price. Because of the buyer's race, the sellers refused the offer. The broker may legally take all of the following actions EXCEPT:

d. Market the house only to non-minority customers

Sam, a FSBO, advertises his property for sale by saying "for sale to Cuban buyers only." May he advertise in this manner?

d. No, individuals are not exempt from discriminating in advertising.

A metes and bounds description is given as follows: "A piece of property beginning at the cross section of highways 32 and 7, thence South 355 feet, thence West 280 feet, thence North 260 feet, thence East 315 feet." Is this a valid description?

d. No, it is imperfect as it does not end at the point of beginning

Salesperson Susan sells to buyer Pete, a home belonging to seller Tom. At the same time she writes a six month option for Pete to buy an adjoining lot, also from Tom. When does Susan earn her commission on the option contract? a. When she is paid her commission on the sale of the home. b. When the optionor and the optionee are brought together. c. When local custom dictates, she has earned it. d. None of the above. Feedback

d. None of the above.

Broker A received an offer of $189,000 on a $200,000 listing. After the seller gave the offer to his attorney to review, another offer for $176,000 came in. What should the broker do?

d. Present the offer immediately

If a broker has an exclusive right-to-sell listing, which of the following statements is INCORRECT?

d. The broker is legally obligated to sell the property

Which of the following is an example of the police power of government?

d. Zoning and building codes

Two brokers owned a real estate brokerage company together. After many years in business, the two brokers decided to split the company in half and each start their own new real estate brokerage company. The brokers wanted to split the current listings 50/50. This could be done if the brokers:

d. received written permission from all parties to the listings