Barney Fletcher Exam questions 2

A buyer purchased a property for $40,000. The buyer then added improvements of $20,000 and sold the property for $80,000. The capital gain would be: A. $20,000 B. $40,000 C. $60,000 D. $80,000

A. $20,000 $40,000 cost + improvements of $20,000 = a basis of $60,000. The price of $80,000 - the basis of $60,000 = a capital gain of $20,000

Which of the following organizations is the largest purchaser of mortgages in the secondary mortgage market? A. federal national mortgage association (FNMA) B. government national mortgage association (GNMA) C. federal home loan mortgage corporation (FHLMC) D. farmer's home administration (FMHA)

A. federal national mortgage association (FNMA)

Which of the following statements is true of a private deed restriction? A. it is imposed by an individual on other people through a contract or deed B. it is put on a property by an owner to reduce tax liability C. it applies only to crops on agricultural property D. it is imposed by the city restricting the use on the property

A. it is imposed by an individual on other people through a contract or deed

A buyer and seller, neither of which is under contract with the broker, ask a broker to write a contract for them. What should the broker do? A. refuse to do anything because he is not their broker B. refuse to do anything unless he gets a commission C. perform his normal services and charge his usual fee D. perform his normal services and not charge a fee

A. refuse to do anything because he is not their broker

If your license is inactive you must: A. renew every four years to avoid cancellation of the license B. wait 2 years before reactivating C. take the required continuing education courses after reactivating D. take the exam again in order to reactivate

A. renew every four years to avoid cancellation of the license

Which of the following items is NOT required to be part of an exclusive agency agreement? A. statement requiring owner to notify broker of the intention NOT to renew B. statement that the listing is exclusive C. proper identification of the property D. commission rate to be paid

A. statement requiring owner to notify broker of the intention NOT to renew

An agreement to waive prior rights in favor of another is: A. subordination B. subrogation C. subornation D. subjugation

A. subordination

Howe's property was assessed at $30,000. Rand's property was assessed at $35,000. Which is true? A. the ad valorem tax on Rand's property is higher than Howe's B. the improvement tax on Rand's property is higher than Howe's C. the special assessments on Rand's property are higher than Howe's D. the special assessments on Howe's property are higher than Rand's property

A. the ad valorem tax on Rand's property is higher than Howe's

A property described as follows sold for $1,500 per acre. "beginning at a boulder go 249' north; then 140' east; then 249' south; then 140' west to the point of beginning." What was the sales price? A. $349 B. $1,200 C. $1,500 D. $34,860

B. $1,200 249 feet x 140 feet = 34,860 square feet. 34,860 divided by 43,560 = .80 acres. .80 acres x $1,500 per acre = a price of $1,200

A property sold for $75,000 with a down payment of 20%. The lender charged 3 discount points. How much in dollars were the points? A. $1,500 B. $1,800 C. $2,100 D. $2,250

B. $1,800 $75,000 x 20% = a down payment of $15,000. $75,000 - the down payment of $15,000 = a $60,000 loan. $60,000 x 3% = discount points of $1,800

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 $1,250 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 transfer tax? A. $202.50 B. $225.00 C. $226.00 D. $675.00

B. $225.00 The transfer tax is paid on the taxable amount. Since there is no loan being assumed, the taxable amount is the sale price of $225,000 divided by 100 = $2,250 x .10 = $225.00

A 3 year straight note was obtained at 10% per year. Interest paid the first two years was $4,200. The loan on the house was 75% of the value. What was the total value of the property? A. $21,000 B. $28,000 C. $31,040 D. $38,750

B. $28,000 $4,200 divided by 2 years = yearly interest of $2,100. $2,100 divided by 10% = $21,000 loan divided by 75% = $28,000 price

A city council zoned a two block area so that only Spanish style homes could be built because of the Spanish heritage in the area. This is usually referred to as which type of zoning? A. directive zoning B. aesthetic zoning because of architecture C. cultural zoning D. bulk zoning

B. aesthetic zoning because of architecture

An appraiser recommended tearing down a $28,000 house. There was a shopping center across the street. Which of the following appraisal principles BEST describes this situation? A. deterioration B. highest and best use C. capitalization D. substitution

B. highest and best use

What document proves that a home loan has been paid off? A. paid stamp on mortgage B. mortgage release C. defeasance clause D. mortgage waiver

B. mortgage release

A broker was retiring and placing her license inactive. What BEST describes what happens to her only salesperson? A. the salesperson can send her license to the GREC and be assigned to a different broker B. the broker can send the salesperson's license in and the salesperson can associate with another broker within one month C. the salesperson can continue to work there although the broker will not be active D. the salesperson may be appointed a temporary broker by the GREC and continue to run the office

B. the broker can send the salesperson's license in and the salesperson can associate with another broker within one month

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? A. July 1 B. there is no date to apply by C. September 1 D. one year from February 1st

B. there is no date to apply by

What could guarantee no encroachments and good title? A. assumption package B. title insurance policy C. survey D. termite inspection

B. title insurance policy

The purchase price of the property was $200,000. The purchaser obtained an 80% loan. What is the amount of the intangibles tax due? A. $600 B. $200 C. $480 D. $160

C. $480 $480.00 the intangibles tax is paid on the new loan amount at the rate of $1.50 per increment of 500. The loan amount of $160,000 divided by 500 = 320 x $1.50 = $480.00

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 $1,250 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 prepaid interest and by whom was it paid? A. Sam $1,350 B. Emma $45 C. Emma $90 D. Sam $45

C. Emma $90 Emma will pay 2 days of unpaid interest, the day of closing through the last day of the closing month.

Which of the following actions by a listing agent would be appropriate? A. advise the buyer that the seller will take less than the list price B. advise the buyer that the seller is going through a divorce C. advise the buyer on the amount of money necessary to assume a loan D. advise the buyer that the seller's home has been on the market for 180 days

C. advise the buyer on the amount of money necessary to assume a loan

Which of the following can a property manager legally do? A. rent only to the ethnic groups dictated by the owner B. follow all the owner's instructions regarding the renting of the property C. ask questions of potential tenants to determine if they have the ability to pay the rent D. charge a higher security deposit to tenants who have a poor credit history

C. ask questions of potential tenants to determine if they have the ability to pay the rent

Seller Grant entered into a sales contract with buyer Howe. Under the terms of the agreement, Howe assumed the loan of Grant. Howe ran into financial difficulties the following year and defaulted on the loan. Under the standard assumption guidelines, who would be liable to the lender on the assumed loan? A. Howe only B. Grant only C. both Grant and Howe D. neither Grant nor Howe as the lender is on their own in trying to recover the money

C. both Grant and Howe

In which way are a mortgage document and a mortgage note similar? A. both are non negotiable instruments B. both are debt reducing instruments C. both are contracts D. both are fully standardized instruments of conveyance

C. both are contracts

Broker Dole was showing a buyer different apartments for rent in a specific area of a city. The buyer asked Dole to find an apartment that did not allow children as the buyer desired peace and quiet and felt that children would destroy their privacy. Broker Dole should: A. tell the buyer to look for ads that read "adults only" apartments B. inform the buyer that this would be "steering" and therefore illegal C. inform the buyer that only bona fide retirement communities can legally restrict children D. inform the buyer that all properties are now open to children due to the 1988 amendments to the fair housing act

C. inform the buyer that only bona fide retirement communities can legally restrict children

Which of the following statements is true regarding an option to purchase real estate? A. there is no definite sales price B. it has to be recorded to be effective C. it has all the elements of a sales contract D. the option is not transferable

C. it has all the elements of a sales contract

When necessary, who forecloses in a trust deed state? A. the beneficiary B. the lender C. the trustee D. the trustor

C. the trustee

A person bought a house and wanted to bring along a pet cougar to keep in the backyard. Which of the following governmental rights would MOST likely prohibit this? A. police power because the police have authority over types of animals for pets B. urban development regulations as they list allowable animals for the properties C. zoning ordinances because sometimes these contain what animals may be kept D. building codes as they would contain the most restrictions for city dwellings

C. zoning ordinances because sometimes these contain what animals may be kept

List price: $142,500 Commission: 7% of sales price Sales Price: $140,000 Closing will be on: May 14 Seller's loan balance (May 1): $86,300 Seller's interest rate: 9% Seller's P&I payment: $839.20 Property taxes: $1,700/year Seller's escrow balance: $1,575 Sellers to pay $150 termite Earnest Money: $7,000 Buyers hazard Ins.: $468 Buyers to pay closing costs of 3.75% of the loan Buyers to pay intangibles tax and any prepaid items Seller's hazard Ins: $450 (expires June 18) New loan: 80% of the purchase price @ 10.25% Monthly payment factor on new loan: $8.97/$1,000 Sellers to pay 2 discount points and the transfer tax How much intangibles tax must the buyers pay in this purchase? A. $427.50 B. $259.50 C. $420 D. $336

D. $336 The new loan amount is $112,000/500 = 224 x $1.50 = $336

A 44 year old man had owned a commercial property for 2 years. He then sold the property making a 20% profit (capital gain). On what percentage of capital gains would he have to pay tax? A. 0% B. 40% C. 60% D. 100%

D. 100%

Which of the following statements about antitrust activity is true? A. antitrust violations require an overt act or agreement B. antitrust activities are only controlled through federal laws C. antitrust violations must be prosecuted under the GA Antitrust Act D. antitrust activities endanger business competition

D. antitrust activities endanger business competition

In order to keep a license on inactive status, one must: A. take the exam again and pay a renewal fee B. wait two years before reactivating C. take the required continuing education and pay a renewal fee D. renew every four years and pay a renewal fee

D. renew every four years and pay a renewal fee

A person who had been convicted of a felony 10 years ago was turned down for a license. If he still desired a license, what is his next course of action? A. file a new license application with the GA Real Estate Commission B. request a hearing before the Attorney General C. make a personal appeal to the Governor D. request a hearing before the Real Estate Commission

D. request a hearing before the Real Estate Commission