Exam Prep Edge National Exam notes

You're showing a house when you notice piles of what looks like sawdust outside near the basement windows. This may be evidence of ______. Carpenter ants Fire ants Ladybugs Powderpost beetles

Carpenter ants

The Baxters are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them? Conventional FHA FHA, VA, or conventional VA

Conventional A $90,000 down payment would be a little more than 20% down ($90,000 ÷ $425,000 = 0.212, or 21.2%). The Baxters should qualify for a conventional loan with that much to put down on the home, and will avoid having to buy mortgage insurance.

Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement? Credit of $1,059.10 Credit of $1,350 and debit of $484.04 Credit of $721.50 Debit of $1,214.85

Credit of $721.50 Tax daily rate: ($1,350 ÷ 365 = $3.70) 195 days (days from closing until year end) = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside closing, so this doesn't appear on the closing statements.

What's the biggest security issue with using social networking sites to market your listings? Criminals may use social networking sites to identify properties that are vacant or have high-end possessions. It may not be effective since you're casting a wide net rather than targeting potential buyers. People may misinterpret your listing information and hold you responsible for their misunderstanding. People you don't know will have your name and contact information.

Criminals may use social networking sites to identify properties that are vacant or have high-end possessions.

Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions must be true? Darren and Natalie are getting a USDA rural development loan. Darren and Natalie are using an FHA-insured loan. Darren and Natalie are using conventional financing. Darren and Natalie made an all-cash offer.

Darren and Natalie are using an FHA-insured loan.

Which task is NOT the responsibility of an escrow officer? Determine how earnest money is to be distributed in case of a dispute. Manage transaction documents from all parties. Prepare closing documents and manage the closing meeting. Verify funding of the buyer's loan.

Determine how earnest money is to be distributed in case of a dispute. The escrow officer is responsible for distributing the earnest money as outlined by the parties or the courts in case of dispute but doesn't have the authority to determine how it should be distributed.

Residents of Tinytown have been complaining to town officials that the village-like character of their town is being affected by the medium-rise condos that developers are building on the edge of town. In response, local government officials rezoned the areas on the edges of town as parklands. What type of zoning is this? Aesthetic zoning Downzoning Incentive zoning Spot zoning

Downzoning

You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients? Buyer agency Dual-license dual agency Seller agency Single-license dual agency

Dual-license dual agency You and the other licensee from your firm are in a dual-licensee dual agency relationship. The broker is the dual agent and has designated you to represent the buyer and the other licensee to represent the seller.

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this? Easement appurtenant Easement by necessity Easement by prescription Easement in gross

Easement appurtenant An easement appurtenant is attached to a parcel of land and transfers with the land. It grants the right to use adjoining land.

What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach? Broad and specific Components and measures Elements and units General and detailed

Elements and units There are two categories of comparison: elements, which look at physical and locational characteristics, and units, which look at the numbers.

Ted is in foreclosure but has some equity in his property. An investor suggests that Ted enter into a sales contract with him for a substantially higher price than the investor would actually be paying. The investor pockets the cash and allow the house to be foreclosed on. What sort of scheme is this? Equity skimming Inflated appraisal Silent second Straw buyer

Equity skimming Equity skimming occurs when an investor receives title to a property, usually rents out the home but doesn't make the mortgage payments. When types of equity skimming fraud like this occurs, houses usually end up in foreclosure.

Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice's needs? Exclusive agency Exclusive right to sell Net Open

Exclusive agency It's easy to confuse exclusive agency and exclusive right to sell. With exclusive agency, the seller retains the right to find a buyer and avoid paying the commission, but the seller's listing will likely receive more attention from the agent than it would with an open listing.

When working with a seller, you signed a listing agreement that ensured you'd receive a commission, provided the property sold during the listing term. What type of listing agreement did you sign? Exclusive agency Exclusive right to collect commission Exclusive right to sell Net listing

Exclusive right to sell It's easy to confuse these types of agency. With exclusive agency, the seller retains the right to find a buyer and avoid paying the commission. Exclusive right to sell agreements prohibit the seller from selling the property without paying the listing agent.

Which entity services rural development loans? FNMA FSA GNMA HUD

FSA The Farm Service Agency, an agency of the USDA, administers this program.

Select the statement that accurately describes an abstract of title. A title company representative must certify the abstract of title. Few states require an abstract of title when conveying property. The chain of title documents the information found during the title abstract process. Title abstracts provide data for the title company's title search.

Few states require an abstract of title when conveying property. The abstract of title process is costly and lengthy; only a few states require this process when conveying property.

What information does the Loan Estimate NOT provide to buyers under required disclosures law? Estimated closing costs Final closing costs Loan fees Loan payment schedule

Final closing costs Lenders provide the Loan Estimate within three days of receiving a borrower's application. Borrowers receive final closing cost information (on the Closing Disclosure) three days before closing.

Katy's home that was listed for sale was destroyed by fire. Under which of these methods will her listing agreement terminate? Completion Expiration Force of law Mutual agreement

Force of law The listing agreement in this situation will terminate based on force of law (destruction of property).

A poor floor plan is an example of which type of depreciation? External depreciation Functional obsolescence Incurable depreciation Physical depreciation

Functional obsolescence Functional obsolescence is a form of depreciation or loss in value caused by defects in design.

What does the income approach to value rely on when valuing properties that are five or more units? Gross income multiplier Gross rent multiplier Monthly gross rent Sales comparison

Gross income multiplier For five or more units, the gross income multiplier (GIM) would be used for the appraised value.

Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance? Her down payment of $50,000 isn't at least 20% of the purchase price. Her lender is a subprime lender. PMI is triggered at the $50,000 down payment amount. She has poor credit.

Her down payment of $50,000 isn't at least 20% of the purchase price. When loan-to-value ratios exceed 80% on a conventional loan, lenders may require private mortgage insurance.

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 not represent a buyer for the previously listed property. Homestead may represent the buyer but may not disclose any information about the property or previous offers on it. Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality. No restrictions are in place since the previous property listing expired.

Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality. Homestead must adhere to its fiduciary duties of confidentiality (to Gertrude) and disclosure (to all parties).

When is a cease and desist order effective? 30 days after issuance 90 days after issuance and for 120 days total Immediately upon issuance Retroactive from the first date of the prohibited activity

Immediately upon issuance A cease and desist order is effective immediately.

Which clause in a contract states that one or more parties won't be held liable if there are losses or expenses related to the contract? Choice of law clause Indemnification clause Severability clause Time of performance clause

Indemnification clause

When a borrower first obtains a mortgage, which portion of PITI receives most of the mortgage payment? Insurance Interest Principal Taxes

Interest Interest receives proportionally more of the mortgage payment in the beginning; over time, more and more of the payment goes toward principal.

Which offer would be the most appealing to a seller? A full-price offer waiving inspection, conventional financing with 20% down, closing in 45 days. An all-cash offer $15,000 below list price, closing in two weeks. An offer $10,000 over list price, contingent upon appraisal and inspection, conventional financing with 20% down, closing in 30 days. It depends on the seller's needs and motivations.

It depends on the seller's needs and motivations. The first principle of evaluating multiple offers is this: The appeal of any offer comes down to the seller's needs and motivations.

Broker Sam has extended an offer to licensee Jane, who has accepted the offer. Jane will work as an independent contractor for Sam. Based on this, which of the following statements is true? As an independent contractor, Jane will not have to fill out any tax-related or IRS-related paperwork. It is up to Jane whether or not she wants to have taxes withheld from her pay. If she does choose to have taxes withheld, she must complete a W-4. Jane will need to fill out a W-4 for tax withholding information. Jane will need to fill out a W-9 for IRS reporting purposes.

Jane will need to fill out a W-9 for IRS reporting purposes. Independent contractors are required to fill out a W-9 for IRS reporting purposes. Only actual employees are required to complete the W-4.

Which of these is an encroachment? A path providing neighborhood access to a pond cuts through part of Bill's property. Jeff installed a sidewalk next to his driveway, six inches outside his property. The city seized a formerly private parcel of land for public use. The state took ownership of Dawn's property when no heirs could be located following her death.

Jeff installed a sidewalk next to his driveway, six inches outside his property. An encroachment occurs when someone illegally places a structure or object on another person's property. Jeff's installation of a sidewalk off of his property is an example.

Which of these is an example of severability? Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force. Mark's contract with Reuben states that either party may sever the contract if any contract term is only partially performed. Misty's lease agreement with Thomas contains a provision that permits her to sever the lease if Thomas doesn't remodel the apartment as promised. Ricardo and Timothy are under contract in the sale of Ricardo's office building. Ricardo's tenant

Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force. Severability refers to the concept that a court can strike down one or more contract terms while leaving the remainder in place.

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 can follow either the federal or the state law as long as she is consistent. Katrina is permitted to follow whichever law is least restrictive. Katrina must follow federal law for any federally related transaction. Katrina must follow the more restrictive of federal or state law.

Katrina must follow the more restrictive of federal or state law.

What's the relationship between the Loan Estimate and the Closing Disclosure? Lenders issue the Loan Estimate to verify the figures detailed on the Closing Disclosure. Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate. Loan Estimate figures should match Closing Disclosure figures exactly. The Closing Disclosure outlines the lender's responsibilities to the borrower.

Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate. Lenders first issue the Loan Estimate; borrowers can compare the Closing Disclosure, issued before closing, to the estimate's figures.

When agents put their clients' interests ahead of their own, this describes the duty of ______. Accounting Loyalty Obedience Reasonable skill and care

Loyalty Loyalty means putting the client's interests first ... ahead of customers' interests and ahead of your own.

John is considering purchasing an office building and is trying to determine whether or not it's a good investment. The methods of income approach he may use when estimating the value are all of the following EXCEPT for which? Market or sales comparison The capitalization method The gross income multiplier The gross rent multiplier

Market or sales comparison Properties that rely heavily on rental income often use the income approach to estimate their value. Three ways to estimate value are the capitalization method, the gross income multiplier, and the gross rent multiplier.

Which of these statements about title marketability standards is correct? Insurable title carries a higher standard of assurance than marketable title. Marketable title can only be achieved if there are no title defects or broken links in the title chain. Marketable title carries a higher standard of assurance than insurable title. Marketable title guarantees that there are no known or unknown title defects.

Marketable title carries a higher standard of assurance than insurable title. Marketable title isn't necessarily perfect title. It may have unknown defects or even known defects that are considered acceptable to a reasonable buyer.

Datums and benchmarks are used for ______. Calculating area Determining land acquisition costs Measuring distance Measuring elevations

Measuring elevations

New Day Corporation's application to build a new mixed-income housing development was denied, because the town of Springfield has halted all new development until after city elections. What did Springfield enact? Area variance Moratorium Special use permit Use variance

Moratorium

Which of the following is the price a lender believes the property will bring at a foreclosure sale? Insured value Investment value Mortgage value Value in use

Mortgage value Lenders won't lend on what they can't recoup. Therefore, the loan amount will be based on what a lender would hope to recoup, should a foreclosure sale be necessary.

Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers? Broadcast clause Marketing clause Multiple listing clause Provisionary clause

Multiple listing clause

When property with a pre-existing lease is sold, the new owner ______. Doesn't have to honor the lease unless it's recorded Isn't obligated by the terms of that lease Must give the tenants at least 30 days to vacate Must honor the lease terms unless the lease states otherwise

Must honor the lease terms unless the lease states otherwise When property with a pre-existing lease is sold, the new owner must honor the lease terms unless the lease states otherwise.

How long does the borrower have to pay private mortgage insurance? 12 years 20 years Until 50% of the original loan is paid off Until the borrower reaches a 22% equity position

Until the borrower reaches a 22% equity position PMI is cancelled when a borrower reaches a 22% equity position. This is based on payments of principal made toward the original loan balance and not on current market value.

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? Implied Incomplete Valid Voidable

Voidable A voidable contract can be cancelled by one or more parties because it's missing an essential element. In this situation, Melanie, the buyer, has the right to cancel the contract and have her earnest money refunded.

Hope's mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this? General Special assessment Vendor's Voluntary

Voluntary A mortgage is a voluntary lien. With voluntary liens, people agree to have the lien placed against their real or personal property.

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? How much the seller's heating and cooling bills went up after the addition was put on Whether or not a licensed general contractor did the work Whether or not the addition was permitted Whether or not the materials used match the original construction

Whether or not the addition was permitted

Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid? No, the contract is missing a legal object. No, the contract is missing offer and acceptance. No, the contract is void. Yes, the contract is valid.

Yes, the contract is valid. While legal capacity includes whether or not all parties are of legal age, contracts signed by minors are valid but voidable by the minor.

When you're representing a client in a real estate transaction, what's your responsibility regarding tax advice? You must be able to advise your clients on the best way to minimize their tax liability related to a purchase or sale. You must not address tax aspects of a transaction in any way, since this would be working outside your area of expertise. You're obligated to answer all questions the clients have regarding property taxes and general tax advice. You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.

You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional. Real estate licensees can educate clients about the general ways that taxes interact with a property sale or purchase, but should otherwise encourage them to contact a tax professional for specific advice.

A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400' deep. What was the price per front foot of the property? $1,335.67 $2000 $363.64 $598.95

$1,335.67 First, find the square footage (5.5 x 43,560' = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.

Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax? $336,000 $387,000 $420,000 $432,000

$387,000 Assessed value of property is sued to calculate property tax

The Walton family got a great deal on their new home. They bought it for $101,295, and it appraised at $187,000. Using an assessment ratio of 25%, what is the assessed value of their new home? $21,246 $25,323 $46,750 $52,753

$46,750 Assessed value is based on the appraised value of the home. So, in this case, $187,000 × 0.25 = $46,750.

Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment? $35,025 $54,150 $57,000 $62,100

$54,150 Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan? $1,108,292.40 $500,000 $608,292.40 $750,000

$608,292.40 First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.

Roland's farm land is assessed at 1.5 million dollars and the improvements for $500,000. At a tax rate of 4 mills, how much are Rolan's monthly taxes? $6,667.00 $667.00 $8,000.00 $80,000.00

$667.00 Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes . Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).

The Goldmans are buying the Kraskis' house for $415,000, and closing is set for March 15. The Kraskis have a loan balance of $230,000 at a rate of 4.7% and have prepaid property taxes ($2,506) and insurance ($1,400), and they also have mortgage interest to consider. Using a 365-day proration method, calculate the prorated amount the Goldmans will owe the Kraskis at closing. Assume February has 28 days this year. The sellers own the day of closing. 1,997.62 $3,113.46 $604.95 $792.54

1,997.62 Calculate daily rates for taxes to be prorated: $2,506 ÷ 365 = $6.87. The Kraskis pay the first 74 days (January 1 through March 15): 74 x $6.87 = $508.38. $2,506 - $508.38 = $1,997.62 owed by the Goldmans. Remember that regarding insurance, if a prorated amount is paid back the sellers, it would be paid by the insurance company rather than the buyers.

The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000? 0.524% 5.24% 6.29% 6.39%

6.29% Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.

Which of the following can indicate issues with heating and cooling? A furnace or air conditioning unit that does not kick on when the temperature is adjusted Consistent temperatures throughout the home Moisture in the basement Windows that won't open or close

A furnace or air conditioning unit that does not kick on when the temperature is adjusted If the furnace or A/C doesn't kick on when the temperature is adjusted, this could indicate problems with the heating and cooling systems. Homeowners should have these units regularly inspected.

Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question? A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year. Buying a home warranty almost guarantees you won't have any issues! If you purchase a home warranty and something breaks, you can sue the seller. The inspection is only as good as the inspector, and there is no guarantee that the inspector found all potential issues.

A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year. A home warranty often covers items that weren't inspected. Also, even the systems that WERE inspected are subject to problems or failure.

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of? A land contract An assumable mortgage A straight-term loan A wrap-around mortgage

A land contract With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.

While Martha's paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item? A deed of trust A mortgage An assignment A promissory note

A promissory note

Which of the following statements about the promissory note is true? A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms. A promissory note isn't a legal document. A promissory note isn't transferable, so it must be held by the original lender until paid in full. A promissory note serves as collateral for a mortgage loan.

A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms. The promissory note is evidence of the debt that specifies the borrower's financial obligations. Collateral for the note is typically the property on which the loan is made. It's a negotiable instrument.

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan? A trustee will hold title until the loan is paid. Their transaction is secured with a mortgage as well. The lender will hold the mortgage, while a trustee will hold the deed of trust until their loan is paid off. The lender will hold the title until the loan is paid off.

A trustee will hold title until the loan is paid. When a deed of trust secures a loan, a trustee holds the title until the loan is paid. Because the right to sell in the event of a default is part of the deed of trust's language, a non-judicial foreclosure may be used.

Tom and Martha live in a neighborhood where lawn ornaments are prohibited. They want to put up a nativity scene at Christmas and argue that the covenant doesn't apply to temporary decorations but only to permanent ones. Their homeowners association disagrees. Which entity enforces subdivision covenants? The civil court system The homeowners association The municipal code enforcement agency The original developer of the neighborhood

The civil court system Covenants are enforced through the court system if an agreement can't otherwise be reached.

What's it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer? Acceptance Binding acceptance Contract closing Exercise of an option

Acceptance Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.

Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited? After Millie receives loan approval for the purchase After the seller accepts the purchase offer At least 10 days prior to closing on the sale Immediately upon receipt by her agent

After the seller accepts the purchase offer Earnest money funds are typically deposited after the seller accepts the buyer's offer.

A fence that's placed two feet onto a neighbor's property line meets the legal definition of _______. A conveyance An easement An encroachment A seisin

An encroachment A physical intrusion onto another person's property is an encroachment.

At what point must a listing agent disclose material facts to all parties involved in the transaction? As soon as possible If asked directly by a party to the transaction Never Only with the seller's permission

As soon as possible A listing agent must disclose material facts as soon as possible to all parties involved in the transaction. The seller's permission isn't necessary.

Because Shelby has a high prepayment penalty on her high-interest loan, she is ________. Able to pay off the loan early without penalty Able to refinance whenever she wants without incurring any penalties Eligible for additional tax deductions Unable to refinance her high-interest subprime loan without paying a stiff penalty

Unable to refinance her high-interest subprime loan without paying a stiff penalty A prepayment penalty fee also may be applied before borrowers can refinance

Tristan's offer has been signed by all parties and delivered back to the seller. This means that ______ has occurred. Acceptance Binding acceptance Notarization Personal delivery

Binding acceptance Binding acceptance happens when a signed contract is delivered according to the delivery procedures and deadline outlined in the contract.

According to the rule of thumb, how can a borrower lower the interest rate on a loan by 1%? By asking the lender to decrease the yield By asking the lender to increase the yield By paying four points up front By paying one point up front

By paying four points up front The rule of thumb says that a borrower can lower the interest rate on a loan by 1% by paying four points up front.

The federal Fair Housing Act includes protections for people with disabilities. It requires multi-family buildings constructed for occupation after March 13, 1991 to have seven special features. Which of the following is one of those features? Bathtubs with low sides for easier access Emergency call buttons in all units Ramps at all exterior doors Unit and internal doors that are usable by persons in wheelchairs

Unit and internal doors that are usable by persons in wheelchairs Unit entrance doors and interior doors should be built to accommodate a wheelchair.

Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of the following statements about this situation is true? Bankruptcy has no impact on agency agreements. Marcus can choose whether or not to continue the listing agreement with Ron. The agency agreement is terminated because the agent filed for bankruptcy. The agency agreement only terminates if the broker or the principal declares bankruptcy.

The agency agreement only terminates if the broker or the principal declares bankruptcy. Bankruptcy of the broker (not the agent) or the principal terminates an agency agreement by force of law.

Select the situation that correctly represents a true conflict of fiduciary duties. Kai learns that her buyer clients' inspector will be reporting a furnace issue to the buyers. She doesn't want to break the news to them. Her duty of confidentiality to the seller and her duty of loyalty to her buyers are in conflict. Nikki's seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki's duty of disclosure, which requires her to present all offers, and her duty of obedience. Renee's clients don't want showings on weekends. Renee knows this may reduce market exposure and she feels it's not in her client's best interests. This is a conflict of her duty of loyalty and her duty of obedience. Terrance's buyer clients don't want him to share with the seller that they're having trouble coming up with the down payment. Terrance's duty of loyalty to his clients is in conflict with his duty of disclosure.

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

Mardee represented condo owner Carol, and they signed an exclusive agency listing agreement. If Carol found her own buyer, would she owe Mardee a commission? No, because Carol is not a real estate licensee. No, because Carol procured the buyer. Yes, because they have an exclusive agency listing agreement. Yes, but she only owes the listing commission.

No, because Carol procured the buyer. It's easy to confuse the types of listing agreements. With exclusive agency, the seller retains the right to sell the property and not pay a commission. Exclusive right to sell agreements guarantee payment to the listing agent no matter who brings the buyer.

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not? No. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values. No. The similarities between commission rates may be suspect, but the similarity between commission splits doesn't matter. Yes. The fact that the firm's commission rates and splits are so similar is a restraint of trade. Yes. The firms' internal commission splits can be the same, but they can't all charge the same commission rate.

No. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values. Commission rates may naturally fall into similar patterns in a given area without collusion between competitors; there must be evidence of an agreement to fix commissions in order for this to be a violation.

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step? Complete a loan application. Obtain a pre-qualification letter. Sign a purchase agreement. Write an offer.

Obtain a pre-qualification letter. Before Percy even begins looking for properties, he should get pre-qualified. He may also consider getting pre-approved.

When buyers haven't spoken to their bank or another lender, how should you handle the situation? Ask questions about their income, assets, and debts to determine their buying power. Ask them to come back when they have spoken to a banker or broker. Inform them that they must be pre-qualified before you can show them any houses. Offer to refer them to a lender and prepare them for the meeting.

Offer to refer them to a lender and prepare them for the meeting. Offering to refer them to a lender and helping them prepare for the meeting will help build trust and loyalty.

Eileen is preparing a report pursuant to the terms of a property management agreement. This report attempts to predict the income and expenses associated with running the property over the next year. What report is she preparing? Budget comparison statement Cash flow report Operating budget Profit and loss statement

Operating budget Operating reports project the income and expenses of operating the property, usually over a one-year period.

Nevina may be creating an implied agency agreement if she does which of these? Contacts a mortgage broker to find out what first-time homebuyer programs are available Gives her neighbor a tour of another neighborhood home that's on the market Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area Speaks to a local civic club about the homebuying process

Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area

Which document is used to give a buyer an overview of the title history and information about what is or isn't covered in an insurance policy? Abstract of title Guarantee of title Preliminary report Title insurance

Preliminary report Title insurance companies issue a preliminary report with the current title history and any liens or encumbrances. It outlines what the insurance company will or won't cover on its forthcoming insurance policy if the title is found to be acceptable.

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? Anticipation Contribution Progression Regression

Progression Progression is the bump in value that a lower-value property gets by being near a higher-value property.

Deirdre lost her job, and the bank foreclosed on her condo. Which of the following of her outstanding debts will the bank pay first? Credit card balance Medical bills Property taxes Student loan

Property taxes

The Hendersons don't have enough money to make the full 20% down payment their lender requires. To close the sale, the seller is willing to finance a loan for the gap between the home's list price and the amount the institutional lender is willing to loan. What's this type of financing called? Equity mortgage Purchase agreement Purchase money mortgage Seller-insured loan

Purchase money mortgage

Who is responsible for following up on issues identified in the inspection report to ensure that they are addressed? The buyers The buyer's agent The listing agent The sellers

The buyer's agent The licensee representing the buyers is responsible for tracking any issues the inspection uncovers and the sellers agree to repair, to ensure that they are repaired prior to closing.

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? Topic: Practice of real estate Subtopic: Licensee and responsibilities Consult with a more experienced licensee at New Beginnings Brokerage to find out if this is standard practice for independent contractors at the firm. Contact the state's labor department and report Luis for attempting to avoid his legal obligations as her employer. Find a new broker to work for; Luis is trying to take advantage of her inexperience. Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance.

Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance. Independent contractors aren't given the same benefits as individuals who are actual employees of a firm. Luis isn't required to pay unemployment insurance or withhold taxes. In fact, if he does this, he might be putting Kiley Ann's independent contractor status at risk.

Ari owned an acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction. There's no record of the sale or change of ownership. A developer has offered Ari several million dollars for the entire acreage, and Ari eagerly accepts the offer. What covenant is Ari in danger of violating? Against encumbrances Quiet enjoyment Seisin Warranty

Seisin The covenant of seisin guarantees that the grantor owns the property that appears in the deed. Because the sale of property to Ari's neighbor was never recorded, his deed still shows that he owns the entire parcel.

Trina is a licensee at Midtown Homes. Which of these factors indicates that she's classified as an employee? She's eligible to participate in the firms 401k retirement plan. She's required to belong to the National Association of REALTORS®. She works from both her home office and an office the firm provides. The brokerage firm supervises her.

She's eligible to participate in the firms 401k retirement plan.

Rhonda purchased an existing pet store in her neighborhood, and she's so excited! Her animal-loving aunt is thrilled for Rhonda but disappointed that she won't be able to visit the store in her wheelchair, as the aisles are narrow and there isn't enough room to move around. What is true about Rhonda's responsibilities to her aunt and other people with disabilities? At a minimum, Rhonda is required to add an accessible bathroom. At a minimum, Rhonda is required to add an accessible entrance to the building. Because Rhonda purchased a retail business, she must meet the same ADA requirements as new construction buildings. Since Rhonda purchased an existing building and business, the ADA requirements aren't as strict as with new construction and vary by building.

Since Rhonda purchased an existing building and business, the ADA requirements aren't as strict as with new construction and vary by building.

Jerry and Simon signed a contract so that Jerry could purchase all of Simon's restaurant equipment for one price after Simon closes his restaurant next month. The contract contains a provision that states Jerry has one year from the purchase date to file a suit relative to the purchase. After the year is up, Jerry forfeits the right. What kind of contract clause is this? Specific time Statute of limitations Time is of the essence Time of performance

Statute of limitations The statute of limitations states the time frame in which a party can file a lawsuit relative to the contract.

Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure? At closing The Closing Disclosure isn't required for a HELOC. Three days before closing Three days from her loan application date

The Closing Disclosure isn't required for a HELOC. Home equity lines of credit aren't subject to TRID disclosures, so Trinity's lender isn't obligated to provide a Closing Disclosure, though other disclosure forms may be required.

What's the relationship between TILA, RESPA, and TRID? The Dodd-Frank Act requires that lenders use the TILA-RESPA Integrated Disclosures (TRID). TILA and RESPA require lenders to use TRID. TILA, RESPA, and TRID mandate the lender disclosures required for federally related transactions. TRID mandates the type of disclosures for TILA- and RESPA-related transactions.

The Dodd-Frank Act requires that lenders use the TILA-RESPA Integrated Disclosures (TRID). TRID stands for TILA-RESPA Integrated Disclosures, which the Dodd-Frank Act implemented for all federally related mortgage transactions.

You're explaining to your client that using electronic documents and signatures simplifies the home buying process. Your client is skeptical about these signatures. You describe the Uniform Electronic Transactions Act (UETA) and tell your client ______. The UETA gives electronic signatures the same legal weight as "wet" signatures The UETA provides a guarantee that electronic signatures will hold up in court The UETA requires states to permit electronic signatures on all real estate-related documents UETA takes precedence over state laws

The UETA gives electronic signatures the same legal weight as "wet" signatures The UETA is an attempt to standardize acceptance of electronic documents and signatures, but state laws govern the use of these electronic items. In states that have adopted UETA (or similar laws), an electronic signature is considered equally valid as a wet signature.

A disabled tenant has requested reasonable accommodations be made inside his unit to improve his ability to move around and enjoy the unit. Under ADA, which of these actions MUST the landlord take? The landlord must pay for the accommodations. The landlord must permit the tenant to make reasonable accommodations and can require the tenant to personally pay for it, but the landlord will have to pay if he wants the unit returned to its original condition upon the tenant vacating the unit. The landlord must permit the tenant to make the reasonable accommodations and can require the tenant to pay for the changes and return the unit to its original condition when vacating. The landlord must respond to the tenant's request within 10 days; otherwise, the tenant can have the changes made and deduct the costs from his monthly rent.

The landlord must permit the tenant to make the reasonable accommodations and can require the tenant to pay for the changes and return the unit to its original condition when vacating. While landlords must permit a disabled tenant to make physical changes, the landlord isn't required to pay for these changes. The tenant can also be required to return the property to its original condition when vacating the unit.

When purchasing a short sale or foreclosure, what's one of the biggest frustrations buyers face? Insurance companies' refusal to insure homes sold as distressed properties Restrictions on the amount a lender will finance on a distressed property The difficulty of finding a real estate professional to help them with the purchase. The length of time it takes to purchase a distressed property

The length of time it takes to purchase a distressed property The purchase of a distressed property can take at least twice as long as the purchase of a traditional property.

Which of these situations would be exempt from most provisions of the federal Fair Housing Act? A homeowner engages a real estate professional to rent out his basement apartment. An investor owns and rents out five duplexes. A non-profit owns 20 properties that it only rents to Caucasian families. The local Elks club owns a property that's rented only to Elks club members.

The local Elks club owns a property that's rented only to Elks club members. Housing operated by religious organizations and private clubs that limit occupancy to members are exempt from the provisions of the Fair Housing Act.

The seller and ______ must approve a short sale. A broker A short sale specialist The new buyer The seller's lender

The seller's lender Both the seller and the seller's lender must approve a short sale, because the lender will be receiving less than the amount owed.

When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true? State and local law override federal law. State lawmakers decide which law prevails. The conflicting law is invalidated, effectively removing the law's requirements. The state law may not remove rights granted to citizens under the federal law.

The state law may not remove rights granted to citizens under the federal law. Fair housing laws are designed to protect citizens from discrimination. States can't make laws that remove rights that federal law grants to citizens.

What would happen if you bought a house and later found out that there were unpaid liens against the property? Nothing. The former owner owes the money on the liens. The lien claimants would lose their liens against your property. The unpaid liens could trigger a foreclosure on your property. You would have to assume a loan to pay off the liens.

The unpaid liens could trigger a foreclosure on your property. If there are unpaid liens on a property after you buy it, you could lose the property to foreclosure.

Walt and Ginger were informed by their landlord that their option to purchase the bungalow they're renting has just been terminated. Which of the following things that can occur is likely to terminate an option to purchase? Ginger put up new curtains. They sublet the bungalow for a month without permission. They went on vacation and left the house empty for 12 days. Walt lost his job.

They sublet the bungalow for a month without permission. A violation of any of the lease terms could terminate the option to purchase. Of these four actions, the only one likely to violate the lease terms is subletting without permission, since most leases have a clause requiring lessor permission to sublet.

A landlord with a strict "no pets" policy won't rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation? This is discrimination based on disability. This is discrimination based on familial status. This isn't discriminatory because service animals are restricted to the vision-impaired. This isn't discriminatory if the "no pets" policy is universally applied.

This is discrimination based on disability. Service animals assisting any disabled individual must be allowed in any housing or residential situation. They're not classified as pets, so even if there's a "no pets" policy, it wouldn't apply.

A quitclaim deed does which of these? Transfers a property with only the covenant of warranty Transfers the property with full covenants Transfers without warranty any interest or title the grantor has when conveying it Transfers with warranty any interest or title the grantor has in the property when conveying it

Transfers without warranty any interest or title the grantor has when conveying it