Final(Metro Brokers)1-50

A homeowner's rented residence has an assessed valuation of $150,000, and a market value of $170,000. The homestead exemption is $25,000. Tax rates for the property are 7 mills for schools; 3 mills for the city; 2 mills for the country; and 1 mill for the local community college. What is the homeowner's tax bill? A. $1,625 B. $1,885 C. $1,950 D. $2,210

A. $1,625

A principal residence is bought for $180,000. A new porch is added, costing $7,000. Five years later the home sells for $220,000, and the closing costs $18,000. What is the homeowner's capital gain? A. $15,000 B. $29,000 C. $33,000 D. $51,000

A. $15,000

A property owner in a development is required to have a shake roof. This requirement is most likely to come from... A. A deed restriction B. A zoning ordinance C. A building code D. A condominium declaration

A. A deed restriction

A zoning board of adjustment might give favorable consideration to a land use variance if... A. Compliance would cause the owner undue and unjustifiable hardship B. The appeal is prepared by professional land use attorneys employing the correct procedures C. The owner can demonstrate a valid homestead exemption D. There is a grandfathering clause in the deed

A. Compliance would cause the owner undue and unjustifiable hardship

A tax rate is derived by... A. Dividing the tax requirements by the tax base B. Multiplying the tax base times the tax requirements C. Subtracting other sources of revenue from the total budget of the taxing district D. Dividing the tax base by the tax requirements

A. Dividing the tax requirements by the tax base

The veteran's administration assists numerous qualified mortgage loan applicants because it... A. Guarantees loans made by approved lenders B. Insurance loans made by approved lenders C. Purchases loans made by approved lenders D. Originates loans made by approved lenders

A. Guarantees loans made by approved lenders

Which of the following items would affect a homeowner's adjusted basis? A. Installing a new furnace B. Replacing a washing machine C. Stripping and staining hardwood floors D. Replacing a broken picture window

A. Installing a new furnace

A tenant obtains a low rental rate for a building, but agrees to pay all operating expenses. This is an example of a... A. Net lease B. Percentage lease C. Gross lease D. Proprietary lease

A. Net lease

A special assessment tax differs from other tax levies in that... A. Properties that receive no benefits do not pay the tax B. The tax levy takes into account other ad valorem taxes paid C. Less valuable properties which stand to benefit will pay proportionately lower taxes D. It creates an voluntary junior lien on the property

A. Properties that receive no benefits do not pay the tax

A miner openly lives and prospects on a 20,000-acre ranch. After twenty years, the owner notices the miner and kicks him off the property. The miner makes a claim of ownership to the property. This claim will likely be... A. Upheld, because the possession was not concealed B. Declined in favor of an easement by prescription C. Declined, because the occupancy period was insufficient D. Declined since the owner was not aware of the possession

A. Upheld, because the possession was not concealed

A property sells for $180,000 one year after it was purchased. If the annual appreciation rate is 10%, how much did the original buyer pay for it? A. $162,000 B. $163,000 C. $180,000 D. $198,000

B. $163,000

A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 of Section 16. What is its acreage? A. 20 Acres B. 40 Acres C. 80 Acres D. 160 Acres

B. 40 acres

Which of the following is included in the legal concept of land? A. A corn crop B. A lake C. A felled tree D. An abandoned vehicle

B. A Lake

Which of the following ways of specializing is common in the real estate brokerage business? A. By background of client B. By type of property C. By years of experience in the business D. By type of mortgage financing required

B. By type of property

A critical determinant of commercial and residential property demand in a market is... A. Availability of land B. Employment C. Existing supply of properties D. Per capita income

B. Employment

In a lien theory state A. liens are recorded in trust as opposed to title records B. The Lender records a lien while the borrower retains title to the mortgage property C. Liened properties are foreclosed by strict foreclosure D. Trustees retain title during a mortgage period

B. The Lender records a lien while the borrower retains title to the mortgage property

A strength of the sales comparison approach to value is that... A. Old as well as new sales data may be used in the adjustment process B. The approach is based on the principle of substitution C. The approach is accurate with unique, special purpose properties D. Sales price can be compared in a neighborhood, since all enjoy the same approximate rate of appreciation

B. The approach is based on the principle of substitution

As an economic product, real estate is unique because... A. It has appreciation value B. The demand must come to the supply C. It is quick to respond to supply-demand imbalances D. Its appeal is predictable

B. The demand must come to the supply

Lenders use the loan-to-value ratio as a guideline in underwriting because... A. The property's value serves to measure the probability of the loan B. The loan amount needs to be less than the property's value. C. Borrowers tend to inflate the true value of the property D. A full-price loan over finances the borrower

B. The loan amount needs to be less than the property's value.

What is meant by "opportunity cost" when speaking of real estate as an investment? A. The financing charge associated with borrowing money to invest in real estate B. The return an investor could reasonably expect to earn from competing investments C. The full cost of acquiring an investment property D. The financial risk of the investment

B. The return an investor could reasonably expect to earn from competing investments

An easement by prescription requires that... A. The use be continuous, known, and permitted by the owner for a period of time B. The use be continuous, open, and hostile for a required period of time. C. The owner of an adjoining property be landlocked D. The owner of the affected property be an adverse possessor.

B. The use be continuous, open, and hostile for a required period of time.

In the past, borrowers were often surprised by unexpected or undisclosed borrowing fees and expenses at closing. This phenomenon has been largely corrected through disclosure requirements mandated by which of the following laws? A. Equal credit opportunity act B. Truth-in-lending laws C. National disclosure procedures act D. Federal fair housing laws

B. Truth-in-lending laws

A property abuts a non-navigable stream. What does the owner own? A. Land to the low-water mark B. Underlying land to the middle of the waterway C. Land to the high watermark. D. All water to the middle of the waterway

B. Underlying land to the middle of the waterway

The president of a local bank wants to sell her home. She instructs an agent to inform a buyer moving to town that her bank, along with others, is about to curtail mortgage lending for the rest of the year. Hearing this, the buyer hurries to make a full-price offer in order to get the loan application in before the freeze. The seller accepts the offer. This contract is... A. Enforceable B. Voidable C. Null D. Valid

B. Voidable

How is the legal life of state created? A. By an owner's voluntary grant B. By operation of law C. Through the four unities D. Through a defeasible conveyance

B. by operation of law

A borrower grosses $4,000 per month and pays $600 monthly for debt obligations. What monthly payment for housing expenses (principal, interest, taxes, insurance) can this person afford based on an FHA debt ratio of 41%? A. $760 B. $1,394 C. $1,040 D. $1,404

C. $1,040

A certain investor wants an 11% return on investment from any real estate investment. A property priced at $360,000 has gross income of $60,000 and expenses of $22,000. Approximately how much too high or too low is the price of this property for the investor to obtain her desired return exactly? A. $1,000 overpriced B. $8,000 underpriced C. $15,000 overpriced D. $16,000 underpriced

C. $15,000 overpriced

A lender determines that a homebuyer can afford to borrow $120,000 on a mortgage loan. The lender requires an 80% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount? A. $96,000 B. $106,000 C. $150,000 D. $160,000

C. $150,000

A property has a net income of $50,000, interest payments of $35,000, principal payments of $3,000, and annual cost recovery of $7,000. The property's tax rate is 28%. What is the property's annual tax on income? A. $4,200 B. $3,360 C. $2,240 D. $1,400

C. $2,240

An apartment building has an effective income of $150,000. Its bills total $64,000, and depreciation is an additional $12,000. Interest payments on the loan total $40,000, and principal payments are $5,000. What is the property's pre-tax cash flow? A. $29,000 B. $34,000 C. $41,000 D. $46,000

C. $41,000

A $300,000 loan has monthly payments of $2000. It's annual interest rate is: A. 4% B. 6% C. 8% D. 10%

C. 8%

In accordance with the statute of frauds... A. Leases in excess of one year must be recorded to be enforceable B. Oral lease are not enforceable C. A five-year lease must be in writing to be enforceable. D. An unwritten lease is fraudulent

C. A five-year lease must be in writing to be enforceable.

Which of the following is true of a homestead? A. A homestead interest can be conveyed by one spouse. B. A homestead interest cannot be exempt from creditors. C. A homestead interest is a form of legal life estate. D. A homestead is any privately owned single family residence.

C. A homestead interest is a form of legal life estate

A condominium estate is distinguished by... A. Ownership of a share in an association and a condominium lease on the owned unit B. Tenancy in common interest in airspace and common areas of the property C. Fee simple ownership of a unit and an undivided share of the common areas D. Fee simple ownership of an equal share of the entire property

C. Fee simple ownership of a unit and an undivided share of the common areas

A major employer relocates, leaving many homes in an area vacant and unmaintained. This is an example of... A. Physical deterioration B. Functional obsolescence C. Incurable economic obsolescence D. Curable external obsolescence

C. Incurable economic obsolescence

Highest and best use of a property is that use which... A. Involves the highest permissible structure and yields the best income B. Is economically feasible, and gives the developer the best return C. Is legal, physical and financially feasible, and most productive D. Complies with the area's master plan and is best for the community

C. Is legal, physical and financially feasible, and most productive

If a person dies with no legal heirs and has left no valid will, what happens to real property owned by that person? A. It is taken by the state according to the process called escheat B. It is probated according to the terms agreed to by the heirs C. It is probated and passes to the heirs by the laws of descent D. It is conveyed to the highest bidder at a public auction

C. It is probated and passes to the heirs by the laws of descent

A retailer installs special display counters to exhibit her products. At the end of the lease term, the retailer moves to another state, leaving the counters are considered which of the following? A. Trade fixtures, and therefore real property B. Trade fixtures and therefore personal property C. Real property, since the trade fixtures were abandoned D. Personal property that must be returned to the retailer

C. Real property, since the trade fixtures were abandoned

Five liens have been recorded against a certain house, in the following order: first mortgage, mechanic's lien, second mortgage, real estate tax lien, special assessment lien. Which lien will be the last one to be paid from the proceeds of the sale of the house? A. Special assessment lien B. Mechanic's lien C. Second mortgage lien D. Real estate tax lien

C. Second mortgage lien

If rents are declining in office properties in a market, it is likely that... A. Unemployment is decreasing B. The market is in equilibrium C. Supply exceeds demand for space D. Demand exceeds supply of space

C. Supply exceeds demand for space

In evaluating a loan application, a mortgage lender is most concerned about... A. The loan interest rate and loan term B. The property location and the amount of the borrower's down payment C. The applicant's financial capability and the value of the collateral. D. The applicant's credit history and background

C. The applicant's financial capability and the value of the collateral.

A master plan can be best described as... A. An annual review of all building permits and zones B. A forecast of existing land use patterns in a market C. A plat of subdivision preceding the design of a land use development D. A fusion of land use laws and local land use objectives and strategies

D. A fusion of land use laws and local land use objectives and strategies

For a conveyance by deed between private parties to be valid, the deed must be... A. Warranted by the grantor B. Recorded by the grantee C. Signed by the grantee D. Accepted by the grantee

D. Accepted by the grantee

One investment advantage of owning a principal residence is that the owner may be able to... A. Deduct mortgage interest and principal B. Defer depreciation expenses C. Deduct capital gain when the property is sold D. Defer capital gain tax

D. Defer capital gain tax

Two important tasks in identifying value through the cost approach are... A. Estimating the cost of the land and its accrued depreciation B. Estimating the value of improvements and the obsolescence of the land C. Estimating the cost and depreciation of the land of the land and improvements D. Estimating the cost of the land and the depreciation of the improvements

D. Estimating the cost of the land and the depreciation of the improvements

The function of a board of equalization is to... A. Equalize mileage rates among taxing districts B. Adjust ad valorem taxes in accordance with a household's income C.Adjust assessed values so that most property owners have nearly equal tax bills D. Minimize wide discrepancies of assessed values within the district

D. Minimize wide discrepancies of assessed values within the district

The taxable income from an investment property is estimated by using which of the following formulas? A. Cash flow minus depreciation B. Net income plus depreciation C. Net income minus debt service D. Net income minus interest and depreciation

D. Net income minus interest and depreciation

An important function of the secondary mortgage market is to... A. Borrow funds from banks so the banks can make more loans B. Issue tax certificates and sell them to primary lenders C. Purchase pools of defaulted loans from lenders to keep them solvent D. Sell mortgage-backed securities in order to buy pools of loans

D. Sell mortgage-backed securities in order to buy pools of loans

What are dimensions of a township? A. One mile square B. Six miles by one mile C. One mile by one mile D. Six miles by six miles

D. Six miles by six miles

Three people have identical rights in a property in a property, share an individual interest, but may sell or transfer their interest without consent of the others. This type of ownership is... A. Joint Tenancy B. Tenancy by the entireties C. Estate in severalty D. Tenancy in common

D. Tenancy in common