Affiliate Broker TN National Exam Practice (PSI)

1. Which type of agent is an escrow officer?

Limited agent

1. Which of the following is true about the security of your clients' information?

· Client data can be compromised if the brokerage's computer system is compromised.

1. Which economic principle is related to supply and demand?

· Competition

1. Which of the following is an example of a universal agent?

· Conservator

1. Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?

· Consideration

1. A tenant had a great experience with his apartment and landlord until about three months ago, when the plumbing in the unit above started leaking into his apartment. The landlord keeps saying he'll fix it but hasn't, and now the tenant has mold growing on two walls. The tenant is moving out before his lease has expired. What does this scenario describe?

· Constructive eviction

1. Which one of the following is true about ownership or title to a property?

· Constructive notice to the public of real property ownership occurs when the deed is recorded.

1. Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built homes is the ______.

· Cost approach

1. What factors does the underwriter consider in reviewing a mortgage loan application?

· Credit, capacity, and collateral

1. Leonard is offered a loan at 5.75%. Because he plans to be in his home for several years, he chooses to pay points up front to have the rate reduced to 5.25%. What's this an example of?

· Discount points

1. What is the primary goal of a home inspector completing a home inspection for first-time buyers?

· Document health and safety issues that may affect both the cost and enjoyment of the home.

1. Three days ago, there was a severe thunderstorm in Shirley's town. Today, there's still a large puddle of water on her property, but it doesn't appear the neighboring properties have any puddles. This could indicate a(n) ______ problem.

· Drainage

1. Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that?

· Ed should remind them that every dwelling, no matter the age or size, should have a home inspection.

1. What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?

· Elements and units

1. Which real property ownership right protects the owner from harassment or interference?

· Enjoyment

1. A tenant violated the terms of his lease by having pets, so the property manager has started ______ proceedings to get him removed from the apartment.

· Eviction

1. A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?

· External depreciation

1. Local authorities lack police power over which of the following?

· Federal government construction projects

1. The Swansons left the family property to their son, Jason, with the stipulation that he does not build on it. The type of estate Jason holds is ______.

· Fee simple defeasible

1. Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have?

· Fee simple determinable

1. The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this?

· Fee simple determinable

1. 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

1. Basement wall cracks and leaks can be indicators of ______ problems.

· Foundation

1. Frances collected an earnest money check from her client, but didn't have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?

· Frances is guilty of commingling.

1. Which of the following would be considered personal property?

· Free-standing TV

1. Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

· Get a low 4.925% APR

1. 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.

1. When interest rates are ______, buyers are often priced out of the market.

· High

1. Georgina is an escrow agent who's holding funds for several transactions. Which of these statements about how she'll disburse these funds is true?

· If the transaction doesn't close, Georgina will disburse the earnest money as instructed by the parties or according to state law.

1. Ashish is purchasing a bank-owned property. His real estate agent tells him the bank is offering insurable, not marketable, title. What does this mean to Ashish?

· Insurable title is one that may have known defects but is still insurable. Ashish should carefully review the title policy.

1. Which of these regarding the impact of the Brownfields Law is true?

· The Smiths have discovered chemical contamination on the property deed to them by their late parents. The Brownfields Law may provide funds to help them clean up the site.

1. Under which of the following circumstances would the client and agent most likely mutually agree to terminate a listing?

· The agent and client don't agree on the best way to price, maintain, and market the property.

1. A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

· The amount it would cost to completely replace her home

1. Moira has delivered a counter-offer to some potential buyers for her property. Which of these best states the time frame for the buyers' acceptance?

· The buyers must respond by the time and date specified in the counter-offer.

1. Which one of these statements accurately represents one of the required elements in a deed?

· The deed includes an act of conveyance.

1. 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.

1. Kelly is closing on the house she's purchasing on Wednesday. Which of these statements is true?

· The lender must provide the Closing Disclosure by Friday of the week before closing.

1. Shalonda is looking to purchase a home for $325,000 using a conventional loan. She has $49,000 to place as a down payment on the house. Which of the following statements is true?

· The loan-to-value ratio exceeds 80%.

1. A property manager needs to pay for some routine maintenance to one of the units in her apartment complex. Which bank account should she use?

· The operating account for that specific apartment complex

1. In pricing a property, what might expired listings tell the real estate professional?

· The price at which a property won't sell

1. SARA is an amendment to which environmental act?

· CERCLA

1. The fewer properties on the market, the greater the scarcity. What's the effect on prices?

Prices are pushed upward

1. Emma is interested in purchasing a property with a big fenced backyard, because her eventual goal is to open an in-home daycare. Which of the following is a zoning issue that you would encourage her to research?

Whether or not current regulations permit home-based businesses

1. Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% of the purchase price in closing costs. How much money should he bring to closing?

· $106,250

1. A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a 1% loan origination fee. How much is the loan origination fee?

· $3,200

1. 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?

· $608,292.40

1. Alison and Brent are financing their house purchase of $232,500 with an FHA loan. Their credit score qualifies them for the minimum down payment. What do they need to put down?

· $8,137.50

1. An 800-square-foot rectangular building sells for $75,000. What's the cost per square foot?

· $93.75

1. Bonnie is calculating the square footage of a listing. The upper level of the home is 450 square feet. The main floor is 1,200 square feet, including an unfinished laundry area that's 225 square feet. The 1,200-square-foot basement is finished. Bonnie's MLS system disregards below-grade square footage. What square footage will Bonnie mention in her MLS listing and marketing materials?

· 1,425

1. In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?

· 10 years

1. If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate?

· 20%

1. A property is 330 feet long by 100 feet wide. How many square feet is the property?

· 33,000

1. Jenna was surprised that the charming Tudor she was touring was still on the market. "I don't see anything bad on the disclosure," she told her agent, "and the price seems fine. Why do you think it hasn't sold?" Her agent Louise responded, "Well, I heard that UPS was opening a new air hub two miles away early next year." Why might this affect Jenna's or other buyers' interest in the property?

· A UPS hub would mean many more flights overhead each day.

1. When real estate licensee Brian discovered that real estate licensee Arnold was using a "Choose Your Neighbor" letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?

· A charge of agreeing to discriminate by limiting access to the property

1. Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don't have the best credit score. They've decided to buy the home using an FHA loan. Which of these is a true statement?

· A minimum down payment of 3.5% is required.

1. Rescission can be ______ agreement to cancel a contract.

· A mutual

1. Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions?

· A verbal lease agreement Martha has with her neighbor who leases Martha's garage

1. Jeffersontown has a zoning ordinance that requires all properties in a designated historic district to have brick or wood plank facades. No aluminum, cement board, or vinyl siding is allowed. What type of zoning is this?

· Aesthetic zoning

1. The property management ______ cements the relationship between the property manager and the owner.

· Agreement

1. Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease, and the other an absolute net lease. Why is his attorney arguing against the latter?

· An absolute net lease has no legal defenses if Simon fails to pay.

1. Which of these situations might be addressed by a subject to clause or limitations in the deed Jane is using to convey property to Moira?

· An easement runs across the property, permitting Jane's neighbors to access the neighborhood boat dock.

1. 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.

1. Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn't, what problem might this create?

· Basement leaks

1. Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?

· Bilateral

1. Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission?

· Both you and Barry

1. Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparables that lack features of his subject property, and others that have even more desirable features, to balance out the comparison.

· Bracketing

1. The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.

· Inverse condemnation

1. Which of the following statements about the fiduciary duty of disclosure is true?

· It's owed to the licensee's clients only.

1. Jennifer plans to sell her rental property to Eliot, a buyer. What obligation, if any, do Jennifer and Eliot have to the tenants of the property?

· Jennifer must notify the tenants of the change in ownership.

1. Your client, Eric, is interested in purchasing an industrial property to start a new business. You've recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn't feel these tests are necessary. What should you do?

· Keep records of your recommendations and a written response from Eric.

1. When negotiating the purchase of a property that's subject to an existing lease, it's critical for your client to clearly understand the lease terms, including the property management responsibilities, rent amount, renewal/purchase options, and the ______.

· Lease duration

1. Leo's client is looking for a property with at least 2,500 finished square feet. Leo finds a 2,200-square-foot property with all the other features the client is looking for, and purposely doesn't mention the square footage to his client. His client agrees to look at the property, falls in love with it, and wants to make an offer, but does not realize it doesn't contain his desired square footage. Which of these statements accurately represents Leo's level of misrepresentation in this situation?

· Leo knew about the square footage and intentionally didn't mention it. He's guilty of intentional misrepresentation.

1. Datums and benchmarks are used for ______.

· Measuring elevations

1. Sam entered into a contract to sell his home to Gina. After the inspection, Gina insisted that Sam replace the damaged roof. Sam refused, and the parties agreed to cancel the deal. This is an example of ______.

· Mutually rescinding the contract

1. Shari's clients want her to post that there are "no showings on weekends" on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______.

· Obedience

1. On what type of listing (or listings) may a net listing be used in states where they are legal?

· Open, exclusive agency, or exclusive right-to-sell listings

1. When a contract doesn't provide specific dates for when the terms need to be met, what should the parties assume regarding performance of the contract?

· Performance must take place within a "reasonable time."

1. When representing the seller, what duty do you owe a buyer?

· Present offers from the buyer to your seller.

1. Melisa's mother gave her house to Melisa, along with a signed copy of the deed granting ownership to Melisa. Years later, Melisa decides to downsize by selling the property. The title company shows that the property is still in Melisa's mother's name. What does Melisa have to do to clear this up?

· Record the signed deed.

1. Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?

· Rectangular government survey

1. When questions arise that are outside of your scope of expertise, what should you do?

· Refer clients and customers to a competent professional in that field.

1. A rundown home, overgrown with weeds and in desperate need of repairs, is driving down property values on the block. What economic principle is at work here?

· Regression

1. If a buyer makes an offer that the seller finds lacking, which of the following actions is the seller most likely to take?

· Respond with a written counter-offer.

1. Which of these is NOT an example of a group boycott?

· Sean and the associated brokers in his firm agree to purchase their marketing materials from a single supplier so they get a quantity discount.

1. Frank owns a property on which there is walkway to the beach shared by his neighbors on either side. What is Frank's property?

· Servient estate

1. The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.

· Substitution

1. The economic principle that tells us that when supply goes up, price goes down is also called ______.

· Supply and demand

1. To whom should you refer your clients for specific advice about income taxes?

· Tax professional

1. What does the "T" in PITI stand for?

· Taxes

1. Marla's excited about closing on a cute lakefront cottage. But when she reads the report from the home inspection, she learns that the chimney leaks and that there is water damage in several places. This wasn't on any of the seller's disclosures. Which of these is the best option for Marla?

· Terminate the agreement and ask for a refund of her earnest money.

1. Prakesh and Jean have always wanted to renovate an old home. They found a Victorian that hasn't been lived in for years and are considering making an offer. Their agent warns them that the property as it stands now may not be insurable. Which of the following might make it uninsurable?

· The 100-year-old wiring

1. Which of these is a TRUE statement regarding truth in advertising violation penalties?

· The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.

1. The Shores are in the process of buying a beautiful 3,000-square-foot home from the Bishops. They've completed all the required paperwork on their loan application. Mary's analyzing the package to determine their ability to repay the loan. She examines the property's value, the property type, and the loan-to-value ratio, among other things. Her recommendation is that the Shores' loan application be approved. What is Mary's role?

· The underwriter

1. What type of estate involves a piece of real estate that's owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year?

· Timeshare

1. Picture a drawing of a section of land. Where is Township 1 located?

· Upper right (NE) corner

1. Which of the following terms means the price a property is worth to its owner as currently enjoyed?

· Value in use

1. Hope's mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this?

· Voluntary

1. What happens when your client asks you to do something that's against the law?

· You must break your duty of obedience.

1. What type of police power allows cities to identify specific uses for an area?

· Zoning