Review 6
uan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?
$1,042.29 how to calculate: In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).
Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have?
$105,000 how to calculate: Gabi's home value has risen $30,000 in the eight years since she bought it ($200,000 x .15). That brings her home's market value to $230,000. She owes $125,000, which brings her equity amount to $105,000. ($230,000 - $125,000).
If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?
$11,500
The Smith home has an assessed value of $64,120, and their tax rate is 3.2%. What is their annual tax bill?
$2,051.84
Helen is purchasing a home for $150,000 and provides a $2,500 earnest money check to the seller, which will be applied to her down payment. She's financing the transaction, and her closing costs and down payment total $4,800. How much should Helen bring to the closing?
$2,300 how to calculate: Helen must bring $2,300 to closing to pay the total amount due. She owed a total of $4,800 minus the earnest money she already paid ($2,500). That leaves her with $2,300 still to pay. This is the amount she still has to pay.
Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay.
$390.91
Whitney and Justin are about to close on their refinance, and their loan amount is $362,000. They are paying a 1.5% origination fee. How much will their origination fee be?
$5,430
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay?
1.71
In addition to fines, individuals who violate antitrust laws may face imprisonment for up to what length of time?
10 years
Your buyers step outside to view the backyard of a property they're touring, but then they can't get the back door closed again. You recognize that this could be a symptom of ____, and realize that if they are interested in this property, they will want to discuss this issue with a home inspector.
A foundation problem.
What is a transfer tax?
A tax that's applied to the transfer of property from one person to another.
Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal, and Kenneth kept the earnest deposit. This is an example of ______.
Accepting liquidated damages
Grace found herself in a breach of contract situation where the other party met some of the terms but not others. Grace thought it would cost a lot of time and money to sue, so she decided to accept the work that had been done and call it good. This is an example of ______.
Accepting partial performance.
When Dashiell received the purchase offer for his bungalow, he was surprised to see a page added to the contract requesting that an attorney review the contract. What is Dashiell looking at?
Addendum
Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step?
Arbitration
REALTOR® Arnold was instructed by his client Sebastian to find a buyer who would "fit into the neighborhood." What is Arnold's responsibility in this situation?
Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws.
What are improvements with regard to property?
Artificial attachments to land that include items such as fencing, buildings, and walkways.
Margot is looking for a 10-year loan with regular affordable monthly payments. In eight years, she'll inherit a good chunk of money from her grandmother and be able to pay off the remaining loan amount. What kind of loan might be best for Margot?
Balloon loan
Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
Barbie owns two-thirds, and Midge owns one-third.
Title VIII of which law prohibits discrimination in the sale, rental, and financing of housing?
Civil Rights Act of 1968. side note: Title VIII of the Civil Rights Act of 1968 is also referred to as the Fair Housing Act of 1968, prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, and religion.
In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?
Comparables
With the cost approach to value, what is the reproduction cost?
Cost to build an exact replica of the subject, with the same materials and deficiencies.
A property owner who wishes to convey property to a new owner will generally use a ______.
Deed
What's an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires?
Discount point
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
Dual agency is the opposite of single agency. With single agency, a firm represents ______.
Either the buyer or the seller.
Ted's property is in foreclosure, but he has some equity in his property. An investor suggests that she and Ted enter into a sales contract for a substantially higher price than the investor would actually pay. The investor pockets the cash and allows the house to be foreclosed on. What sort of scheme is this?
Equity skimming
Jerry and Lewis have entered into a sales contract. They're about three weeks into the transaction, with several terms of the agreement yet to be met. What type of contract do Jerry and Lewis have?
Executory
In general, what is the term for a person who's been placed in a position of loyalty and trust?
Fiduciary
Your clients, the Harpers, live in Area B that's adjacent to Area C; Area C was recently downzoned. If the Harpers believe the rezoning has harmed their property values, what can they do?
File a claim of inverse condemnation.
Roxanne just finished making a buyer presentation to Fred and Regina Jones. Now that they understand the difference between being customers and being clients, they're anxious to be represented. What is one of Roxanne's duties to them as their buyer's agent?
Finding properties to show to Fred and Regina.
Magda, a property manager, wants to enter each of the dwellings to change the furnace filters. She should _______.
Give tenants proper advance notice
A landlord has an available unit but refuses to show it to several applicants. These applicants are all single women with children. The applicants who are shown the apartment are all individuals or couples without children. In what way is the landlord violating fair housing law?
He is discriminating against people based on familial status by refusing to show available housing.
Oliver is working to provide a buyer and a lender with a formal opinion of the value of the property the buyer is purchasing. What is Oliver's role?
He's a certified or licensed appraiser.
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.
What does a balloon payment represent at the end of a loan term?
It means that some principal remains at the end of the loan term. side note: A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.
Drake's offer to purchase Kevin's condo currently has a financing contingency, an inspection contingency, an appraisal contingency, and a sale of current home contingency. Kevin also got an offer from Lucy, which came in at $5,000 less than Drake's offer but with only an appraisal contingency. What is true about Drake's offer compared to Lucy's?
It's likely viewed as a less favorable offer.
Todd and Tory sign a contract agreeing to falsify the cost of roofing repairs on Todd's house so Tory can collect more insurance money. Why is this contract invalid?
It's not for a legal purpose.
Oscar bought an older home and hired a contractor to replace the old knob and tube wiring throughout the house. He was invoiced for the work, but 60 days have passed, and Oscar has yet to pay the bill. The electrician filed a lien against Oscar's house. What type of lien is this?
Mechanic's
Jacob's family has operated a neighborhood grocery store in the community since before the land was zoned residential. Jacob continues to operate the store legally. What would you call this?
Non-conforming use
Tabitha listed her property for sale, but it's been on the market for several months with no offers. She decides to terminate her listing agreement and rent the property out instead of selling it. Assuming that her listing agent has fulfilled all of his responsibilities under the contract, can Tabitha terminate the contract before its expiration date?
Only if she and the listing agent mutually agree to terminate the agreement.
A brokerage firm that hires licensees as employees instead of as independent contractors must ______.
Pay licensees a regular salary regardless of the revenue they generate.
Upon examination of his mortgage document, Jared finds a clause stating he will owe additional interest if he pays off his loan within one year of the loan origination date. What type of penalty does this describe?
Prepayment
The smallest property on the block is 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?
Progression
Seller Gina feels awful that Martha, who was going to buy her property, lost her job. Gina decides to ______ Martha from the purchase contract.
Release
Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.
Rescinding the contract unilaterally
Kyle owns six acres of land with 400 feet of river frontage. He wants to build a beach along the river bank to make it easier to swim in the river. He can do this because as the owner of river frontage, he has ________ rights.
Riparian
DeeAnna thought she purchased an investment property, but the seller refused to deliver the title to her. DeeAnna met all of her obligations per the written contract she and the seller signed. She decided to take the seller to court in an effort to force him to hand over the title. This is an example of ______.
Suing for specific performance
Marlon and Leah are interested in buying a home in a new homeowner opportunity area. The 100-year-old row house was renovated and is like new on the inside. The property taxes decreased by more than $5,000 last year. What's the likely reason for this?
Tax abatement side note: A tax abatement program will lower the property taxes on a given property for a set amount of time. This is typically in response to some sort of improvement or rehabilitation, or for some new construction properties.
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.
Phoebe is careful to never act outside of her scope of expertise. She's a real estate professional and proud of it, so when asked for advice about legal matters, inspection results, flaws in construction, or shoddy building materials, she always refers them to a professional in that field. Which duty is Phoebe demonstrating?
The duty of reasonable skill and care.
Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on. What's wrong with Debra's thought process?
The earnest money doesn't belong to Debra. It will be held in an escrow account.
In what way is a townhome similar to a condominium?
They both typically have HOA dues.
Gail was supposed to close on her new home by the end of May, but she kept asking the sellers if they could push the closing date back. Soon the summer was over, and she still hadn't closed. Gail was guilty of not adhering to which aspect of the contract?
Time is of the essence
What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?
Time is of the essence
Clay is interested in purchasing a condo about a mile from the city center. He went to the city records office to review everything that was filed by the condo developer. In the condominium declaration, he saw how ownership of the common areas is shared among the ______.
Unit owners
Blake is allowed to use his property in a way that's prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?
Use Variance
In contract law, undue influence differs from duress in that duress includes ______.
Use or threat of force
Kennedy tends to be rather informal about her real estate business. Her daughter's teacher, Matthew, tells Kennedy that he'd like her help selling his house. Kennedy agrees and tells Matthew she'll perform all the tasks she'd perform for any listing, though she has no written agency agreement with Matthew. Do Matthew and Kennedy have a legal agreement?
Yes. Express agreements may be verbal or written.
Buyer Peter is eager to make an offer on the two-story home you just showed him, but you're concerned about the back bedroom, since it looks like a relatively recent addition. When Peter asks you why it's an issue, how do you respond?
You recommend that Peter check on the permits for it, so that he doesn't buy the house and then have to correct or even remove the addition because it wasn't built to code.
Which of the following would make the "Choose Your Neighbor" flyer an allowable strategy for finding prospective buyers? a. As part of a comprehensive marketing strategy that doesn't limit or restrict potential buyers b. For property located in a gated community c. For rural properties greater than 20 acres d. With seller consent
a. As part of a comprehensive marketing strategy that doesn't limit or restrict potential buyers
Which of the following is true about the security of your clients' information? a. Client data can be compromised if the brokerage's computer system is compromised. b. Data security is one-size-fits-all. c. Poor record retention ensures data security. d. There is nothing a licensee can do to safeguard client data.
a. Client data can be compromised if the brokerage's computer system is compromised.
Which of these is NOT an example of an agent executing the duty of reasonable skill and care? a. Kevin, Corinne's buyer agent, made several mistakes on Corinne's offer. Most were minor, but one could end up costing Corinne. b. Marta refuses to list a commercial property because her expertise is in residential real estate. c. Morgan is careful to protect and manage all his client's earnest money deposits. d. Rex promptly submits all offers to his seller client.
a. Kevin, Corinne's buyer agent, made several mistakes on Corinne's offer. Most were minor, but one could end up costing Corinne.
Which practice involves talking the consumer into refinancing over and over so a lender can charge fees? a. Loan flipping b. Poison lending c. Premeditated lending d. Turnover lending
a. Loan flipping
Select the statement that accurately reflects the type of deed used for the transfer. a. A bargain and sale deed conveys property in a foreclosure proceeding. b. A deed of trust conveys real estate to a trustee for the beneficiary named in the deed. c. A referee's deed conveys property from one spouse to another in a divorce proceeding. d. A warranty deed conveys REO property from the lender.
b. A deed of trust conveys real estate to a trustee for the beneficiary named in the deed.
Which of the following is a common element of a buyer representation agreement? a. Closing date b. Description of the property being sought c. Method of financing d. Property address (including legal description)
b. Description of the property being sought
Jason's having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state's usury law. Which of these statements must be true? a. Consumers are not supposed to be charged interest on a personal loan. b. His state's personal loan interest rate cap is less than 20%. c. His state's personal loan interest rate cap is more than 20%. d. Landlords loaning tenants money is a violation of usury law.
b. His state's personal loan interest rate cap is less than 20%.
Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this? a. Area preference b. Improvements c. Permanence d. Scarcity
b. Improvements
Which ownership type is defined by four unities: time, title, interest, and possession? a. Freehold estate b. Joint tenancy c. Tenancy by the entirety d. Tenancy in common
b. Joint tenancy
Which of the following could indicate a problem with the chimney flue or ventilation? a. Damage around the fascia b. Doors that won't open c. Drafts near the fireplace d. Holes in the soffit
c. Drafts near the fireplace
Which of these landlord actions would NOT be considered a reasonable accommodation? a. Allowing assistance animals when there's a "no pets" policy b. Assigning a parking space close to the building when the general policy is that there is no assigned parking c. Moving disabled tenants to units near an elevator d. Permitting transfers to a ground-floor unit
c. Moving disabled tenants to units near an elevator
Gene, a real estate licensee, prefers to use electronic documents and signatures because it means he doesn't have to track people down to deliver documents or have them signed. Which of these statements is true? a. Brokerage firms can require that clients accept the use of electronic documents and signatures. b. Licensees can require clients to accept the use of electronic documents and signatures. c. Parties to the contract decide whether or not to accept the use of electronic signatures and documents. Some states require the use of electronic documents and signatures in real estate transactions.
c. Parties to the contract decide whether or not to accept the use of electronic signatures and documents.
According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation? a. Group boycotting b. Market allocation c. Price fixing d. Tie-in arrangement
c. Price fixing
Your neighbors build a high-quality addition to their home, increasing its value compared to your own home's value. Because of this, you notice a bump in your property value. Which economic principle is at work here? a. Conditional value b. Price bump c. Progression d. Regression
c. Progression
Why are galvanized pipes a problem in older homes? a. They are not a problem. b. They are out of date and can lead to a variety of electrical problems. c. They can rust and cause leaks and low water pressure. d. They indicate the heating and cooling system(s) are outdated.
c. They can rust and cause leaks and low water pressure.
A quitclaim deed does which one of the following? a. Transfers a property with only the covenant of warranty. b. Transfers the property with full covenants. c. Transfers without warranty any interest or title the grantor has when conveying it. d. Transfers with warranty any interest or title the grantor has in the property when conveying it.
c. Transfers without warranty any interest or title the grantor has when conveying it.
Which body of law contains the rules governing the relationship between a real estate professional and the person being represented? a. Employment laws b. Fair housing law c. Human rights law d. Law of agency
d. Law of agency
Tristan refused to let Marla list his property on the MLS, even though Marla told him that more exposure to the property would generate more potential buyers. Which two fiduciary duties are at odds in this situation? a. Loyalty and confidentiality b. Loyalty and reasonable skill and care c. Reasonable skill and care and confidentiality d. Reasonable skill and care and obedience
d. Reasonable skill and care and obedience
Which of these statements accurately describes finance- and housing-related legislation? a. As a stipulation of the Housing and Community Development Act, lenders must offer reasons when rejecting loan applications and must respond to all applications within 30 days. b. The Americans with Disabilities Act added familial status and disability (both physical and mental) to the existing protected classes. c. The Equal Credit Opportunity Act of 1974 required lenders to provide consumers with equal access to credit and prohibited credit discrimination based on just the three protected classes of race, color, or national origin. d. The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
d. The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy? a. The covenant against encumbrances b. The covenant of seisin c. The covenant of the right to convey d. The covenant of warranty
d. The covenant of warranty