Real Estate Exam - created by JG

On a loan balance of $15,625 the next monthly payment will include $112.90 to be applied to interest. What is the interest rate of the loan?

$112.90 * 12 = $1,354.80 annual interest. $1,354.80 / $15,625 (loan amount) = .08670 of 8.67% interest. The correct answer is: 8.67%.

A 10 unit apartment complex has a gross annual rent of $80,000. It recently sold for $750,000. A nearby, similar complex has a gross annual rent of $95,000. What is the indicated value of the similar complex?

( 750000 x 95000 ) / 80000 = $890,625

If a Georgia home is purchase for $168,500 and financed with an 80% conventional loan, which of the following is the amount of transfer tax paid?

(168,500 x (0.10/100)) = $168.5

Normal wear and tear on a property would be considered:

(C) Normal wear and tear would be physical deterioration, which is normally caused by deferred maintenance. (A) Functional obsolescence is when a property does not function the way modern properties do, such as a home with an outhouse. (B) Economic obsolescence and (D) external obsolescence mean the same thing - a property has problems that are outside the property lines, such as a home next door to a factory. The correct answer is: physical deterioration

In order to keep a license on inactive status, one must:

(D) One can remain on an inactive status but must renew every four years and pay the appropriate fees. One does NOT have to (A) take the exam again, (B) wait two years before reactivating or (C) take continuing education. Answer: renew every four years and pay a renewal fee

According to BRRETA, a licensee is responsible, under certain circumstances, for disclosing facts known about the area surrounding a property. What is the extent, in miles, that this disclosure encompasses?

1

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. What was the amount of the property tax proration?

212.33 is the amount that will be paid by the buyer to the seller at closing. Since the closing was after July 1st, the taxes had been paid in full. The Seller will be credited with 62 days, the day after closing through the end of the year. Annual tax bill $ 1,250 / 365 = $ 3.4246 per day x 62 days = $ 212. 3287 = $ 212.33 The correct answer is: $212.33

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?

Adjusted basis.

Seller Carr had sold his property and closing was scheduled to take place in two weeks. The broker heard that a distant cousin of the seller was planning to make a claim on the property. What should the broker do?

Advise the seller to contact an attorney to seek a quit claim deed from the cousin

Which of the following is an example of a subdivision?

All of the above: Condominiums, PUD, Industrial park.

The value of real property is affected by which of the following?

All of the above: real estate taxes, The cost of financing, Government regulations and zonin

The Equal Credit Opportunity Act makes it unlawful to refuse to grant credit to qualified applicants on the basis of:

All of these choices. (a. Age, Marital status, & Religion)

Jennings decided she will acquire title to a piece of unused land by adverse possession. In order to do this, Jennings' occupancy of the land must be:

All of these choices: a. Hostile to the interest of the true owner, Continuous, Open and notorious.

Which of the following activities would be allowed under the Georgia License Law?

Allowing a salesperson to accept earnest money with an offer on behalf of the broker

RESPA prohibits all the following EXCEPT?

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

Mr. Hardcase wants to reserve the right to sell his home to a co-worker without paying a commission to a broker. Which of the following listings should he sign?

An exclusive agency

A homeowner tells a broker that he would like to sell his house. The broker agrees to sell the house. This agreement would be considered:

An express contract

A salesperson comments to a prospective buyer, "In my opinion, this is the best place in town to live." The salesperson is guilty of:

An opinion expressed by the sales agent is just that. It is puffery. The correct answer is: Puffery

What type of contract is an exclusive right-to-sell listing agreement?

Bilateral

Owner Kelly is leaving the area for a one year period. She asks salesperson Boren to manage her rental house for $45 per month while she is gone. Which of the following is true in this situation?

Boren must work through her broker

Two brokers form a partnership, each with a 50% interest. One is the general managing partner and the other is a sales broker. What type of ownership do the brokers have?

General partnership.

Andrew, an owner, lists his home with salesperson Heidi with the provision that the house not be shown if he is not at home. Andrew leaves town on Monday for a two-week business trip. On Tuesday, Jose and Maria, a minority couple, contact Heidi and want to see Andrew's house. Heidi refuses to show the house. In this situation, which of the following statements is true?

Heidi's refusal to show the property is in keeping with her duties to Andrew and she has not violated the law.

A person invested $5,000 in a limited partnership. One of his concerns was the amount of his liability. Since he is one of the limited partners, can he be held liable for more than his initial investment?

No, because he is only liable for his initial investment

A seller agreed to pay a broker a commission of $5,500 if the broker sold the property for up to $97,000. Any sale price amount over $97,000 would also be for the broker to keep. Would this type of listing be allowed under the Georgia License Law?

No, because net listings are illegal in Georgia

An area of the city is rezoned residential. Would this change threaten a bowling alley which was already in use on this area?

No, because the bowling alley was already there when the zoning changed

Under the customary listing agreement, the broker, as the agent for the seller, can:

Place a "For Sale" sign on the property

If title to real property will pass to someone, other than the grantor, upon termination of an estate, the interest held by the person who will receive the property has a:

Remainder interest

A seller walked away from closing with $140,023. She had paid settlement costs of $4,220 and a 6% commission. What was the selling price of the property?

Sales price = commission + (net to seller and expenses). Sales price (100%) = 6% + 94%. 100% = 6% + $140,023 + $4,220 ($144,243). $144,243 (94%) = sell price - 6% commission. $144,243 / .94 = $153,450 sale price. $153,450.

Two brokers got into a fight over a commission. They appealed to the GREC to get it settled. What will the GREC do?

The GREC will NOT get involved in any commission disputes between licensees

The authorities are investigating a violation of the law by a licensee. Which could happen?

The Georgia Real Estate Commission could revoke or suspend his license

According to a community association management agreement, the duties of a property manager include all of the following except?

The agreement must be made by a CAM licensee.

A person who is licensed in another state applies for a license in Georgia. The GREC learned that the applicant Did NOT have a high school diploma nor a GED. Which of the following is true regarding the issuance of a license?

The applicant could NOT get a license because of the lack of a high school diploma or a GED

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

The borrowers do not have the required down payment.

An owner and tenant enter into a one year lease. Six months later the lessor dies and the lessors' heirs want to take physical possession of the property. Which of the following is correct?

The heirs may not occupy the property until the lease expires.

When a seller and licensed salesperson agree to a listing, on terms acceptable to the broker, an agency relationship is established between:

The listing broker and the seller

Which of the following is not found in a property management agreement?

The property manager conducting an appraisal on the property once a year.

A purchaser submits an offer to a seller with the condition that the property is to be financed by a conventional loan at no more than 10% interest. If the seller agrees but such financing cannot be obtained, which of the following is true?

The purchaser may request his deposit be returned

A person decides to place their license inactive. Which of the following statements would be true?

Their license would be held by the GREC

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?

There is no date to apply by

A broker listed a property for $87,500. While showing the property, a buyer remarked that $84,500 is what the buyer would like to offer for the property. The broker told the buyer that the seller will not accept anything less than $86,500. Did the broker do anything illegal under the Georgia License Law?

Yes, as the broker cannot disclose to the buyer that the seller will take anything less than the list price

ABC developers advertise, "For rent to anyone including those who are handicapped." May they advertise in this manner?

Yes, it is inclusive of everyone including the handicapped.

If a buyer purchased a house in Georgia for $168,500 and took out an 80% loan at 7.5% interest per annum and the purchase closed on March 15th, what is the total dollar amount, if any, of the prepaid interest?

the loan value = property value x 80% 168,500 x 0.8 = 134,800 prepaid interest value = (loan value x annual interest rate) x (17 days/365 days) = (134,800 x 7.5%) x (17/365) = $470.88

Claims filed with HUD for alleged Fair Housing violations must be filed within:

1 year.

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. If Emma paid PMI all at closing, how much did she pay?

90% LTVR requires a 2 % PMI to be paid on the loan amount. $202,500 x 2 % = $ 4,050.00 The correct answer is: $4,050.00

The accumulation of soil on an owner's property caused by the movement of water is known as:

Accretion

The sale of a Georgia home closes on March 15th. If the seller owes $45,300 on a mortgage against the home and the interest rate is 6.5%, what What, if any, is the amount of accrued interest paid?

Accrued interest = (principle x rate x time) / (100x360) accrued interest = (45,300 x 0.065 x 15) / (100x360) = $122.69

If a contract for sale contains the words "time is of the essence," it means that the closing must be completed:

As soon as possible.

A legal land description must:

Be sufficient to identify the property.

A defeasance clause in a mortgage will take effect when the:

Borrower repays the entire debt.

John Doe is trying to rent one bedroom in his house. An Hispanic applies and is told by the owner (Doe), "I will only rent to a Caucasian." Which law has John violated, if any?

Civil Rights Act of 1866.

Which of the following is NOT a right that the state has in privately owned property?

Encumbrance.

The length of the front of a lot along a street is referred to as the:

Frontage

Which type of deed creates the most liability for a seller?

General warranty deed

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

Immediately

How would an appraiser normally appraise an office building?

Income

Which of the following is the most common method of enforcing a restrictive covenant?

Injunction

Two brokers from different firms agree that they will charge the same commission rate for all property listed by their offices. Such action:

Is in violation of anti-trust laws.

When appraising new single family homes, the greatest reliance would be placed on which of the following?

Market value and replacement cost

Which of the following mortgages provides for funds to be available at a later date, but also limits the total amount to be advanced?

Open end.

Barney owns a lot valued at $84,000. He purchases an adjoining lot for $66,000 and merges the two properties. The current appraised value of the newly formed lot is $177,500. This is an example of:

Plottage

A salesperson who is acting as agent of the seller only was showing a two bedroom house to a buyer. Which of the following facts must the salesperson disclose to the buyer?

Property is located in a flood plain

An owner lists a property with a broker. The broker shows the property and receives an offer, but is unable to present the offer to the owner. Two days later, the owner cancels the listing agreement. What should be done with the earnest money deposit received with the offer to purchase agreement?

Returned to the buyer

If a third party is not named, the grantor of a life estate retains a:

Reversionary interest.

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

Simple interest

A seller told a broker during the listing presentation that cash only should be accepted for the earnest money deposit. The broker presented an offer with a check as earnest money but failed to disclose this to the seller. The seller accepted the offer only to find out two days later that the earnest money check was worthless. Did the broker do anything wrong?

Yes, the broker did not follow instructions

In order to sit for the Community Association Management (CAM) state licensing exam, an applicant must:

complete a 25 hour approved course of study.

An appurtenant easement would BEST be described as an easement that:

runs with the land

A new property was valued at $179,000 with an estimated life of 50 years. The value of the land has been estimated at $19,000. After allowing for depreciation, what is the value of the property at the end of 5 years?

$144,000 + $19,000 (land value) = $163,000 total value. The correct answer is: $163,000.

A broker, acting as a dual agent, with the knowledge and consent of all parties, collected one-half the commission from the seller and one-half from the buyer at settlement. Which of the following statements is true concerning this situation?

A dual agency is the type of agency where a broker represents BOTH buyer and seller to a transaction. It is lawful in most states as long as both parties (buyer and seller) know about the dual agency and provide written consent. The correct answer is: This action is permitted only with the consent of both parties

In dual agency, the consent form must contain all of the following except?

A lot and block legal description of the property

A mortgage loan that provides for changes in the interest rate at specified periods of time, is known as:

Adjustable rate mortgage.

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

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

An unlicensed secretary is the only one in the office as all the licensees are out to lunch. Broker Carr from another company calls requesting information on a property. The secretary may:

An unlicensed secretary cannot give out real estate information; therefore, she must take a name and number and have a licensed agent return the call. (A) An unlicensed person CANNOT give out a sale price or address. (C) An unlicensed person CANNOT disclose this information to anyone, a licensed agent or a member of the public. (D) Just mailing the information does not change the fact that an unlicensed person cannot do this type of activity. Answer: take his name and number to have a licensee return the call

An offer is accepted by all parties with a settlement date of September 5. Three days prior to settlement the purchaser notifies the seller that funds are not available and settlement cannot take place as scheduled. Which of the following options are available to the seller?

Any of the above: Sue for specific performance, Sue for monetary damages, Allow rescission of the contract

Which of the following would cause what appears to be an otherwise valid contract to be declared invalid?

Any of the above: a. Misrepresentation by one of the parties. b. Undue influence or duress. c. A mistake in fact.

Georgia's agency law is known as:

BRRETA (Brokerage Relationships in Real Estate Transactions Act)

If the sale of a Georgia home closed on March 15th and the annual tax liability is $1,300, the tax proration amount is?

Begining of sale is January 1, Closing of a sale is March 15, End of the tax is December 31; (Annual tax bill ÷ 365) ×Days owed = Tax proration amount days = 31+28+15 = 74; (1300 / 365) x 74 = $263.56

Broker Jane is acting as a dual agent in a real estate transaction and decides to appoint salesperson Sara to represent the seller and salesperson Ben to represent the buyer. Ben and Sara both work in Jane's firm.

Ben and Sara are designated representatives.

Gene owns a single-family home that he rents. He sold the property and realized a profit. Gene may defer payment of taxes on the profit:

By purchasing another "like-kind" investment property.

A house sold for $145,500. The seller paid $3,490 in closing costs and 5% commission to the broker. The seller received $31,400 from the proceeds of the sale after paying off an existing loan. What was the amount of the loan?

Commission Paid $7,275 ($145,500 X 5%). Closing Costs $3,490. Total Paid out $10,765. Seller received cash $31,400. Sales price ($145,500) less pay-outs ($10,765) and cash received ($31,400) = $103,335 required to pay off existing loan. The correct answer is: None of these choices

Salesperson Sally works for Broker Bob and plans to sell her own home. Assuming proper permissions are obtained, she may handle trust funds related to the sale of her home in each of the following ways, EXCEPT:

D. She may hold the funds in a special savings account without registering it with the Georgia Real Estate Commission. Trust funds must be kept in a specific trust fund account. Trust funds must be held in accounts separate from personal and business funds.

According to the Truth-in-Lending Law, certain words used in advertisements trigger full disclosure of ALL of the terms of financing. Which of the following statements would NOT require any additional disclosure?

Liberal terms available

An attorney who is not a real estate licensee gives referrals to a real estate company. Can the attorney receive a referral fee from the licensee?

No, as the attorney does not have a real estate license

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?

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

A salesperson decided to sell her house. She did not want to list the house with her brokerage company. Instead, she wanted to sell her own house as a for-sale-by-owner. Which of the following items would the salesperson have to do?

Put in all advertising "seller holds a real estate license", including the yard sign

A person who had been convicted of a felony 10 years ago was turned down for license. If he still desired a license, what is his next course of action?

Request a hearing before the Real Estate Commission

A mortgage is released by?

Satisfaction

A broker and a non-licensee went together to buy a piece of property. What is the minimum that the broker must disclose to the seller?

The broker would have an interest in the property

When an appraiser is using the Market Data approach on a residential property, the appraiser would be LEAST likely to use which of the following?

The correct answer is: The cost of nails, shingles, floor joists and paint on the subject property

Zoning laws are usually NOT enacted by:

The federal government.

A general agency empowers the agent to:

Transact the clien'ts affairs in a certain business.

An oral listing is:

Unenforceable.

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

Vacancy rates and bad debts.

Which of the following is not true about a deed to secure debt?

With a security deed, the lender holds equitable title.

A buyer makes an offer on a property with some earnest money now and some to follow later. What should the licensee do?

Write the offer as is with the extra earnest money to follow later

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

A 17-year-old who meets all the education requirements of the license law.

For answering some of the following questions, you may need to be sure of the number of days in each month. For those items, you should refer to the table below. Tax calculations assume that property taxes are due and payable on July 1. If a closing is before July 1, you are to assume the taxes have not been paid (unless told otherwise). If closing is July 1 or later, you are to assume taxes have been paid (unless told otherwise). The tax year will begin on January 1 and end on December 31 and is a 365 day year. Interest prorations will be based on a 360 day year unless told otherwise. Loan amounts will be lowered to the next lower $100 increment if not in even $100 amounts. January............. 31 February........... 28 March............... 31 April................. 30 May.................. 31 June.................. 30 July................... 31 August.............. 31 Sept.................. 30 October............. 31 November......... 30 December......... 31 The sales price of the property is $185,000. The new loan is $145,000. How much will the transfer tax be?

$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 intangible tax?

$225,000 x 90% LTVR = 202,500 / 500 = 405 x $1.50 = $607.50. The correct answer is: $607.50

A term loan is 75% of the property appraisal. The annual interest rate on the loan is 8% and the interest for the first year is $3,870. What was the amount of the appraisal?

$3,870 divided by 8% = $48,375 loan. $48,375 divided by 75% = $64,500 appraised value. The correct answer is: $64,500.

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.