CE Real Estate - National Exam (PSI) #3
Seller Jason is giving listing agent Rebecca a tour of his house and pointing out all the features, even the spot in the attic where a previous owner's ghost likes to come back and visit. Jason asks Rebecca if buyers should be told about this. Which response is best? "All states require sellers to disclose any undesirable feature of a house, which includes ghosts." "The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws." "We can tell prospective buyers that the property comes with a roommate." "You can't mention this, because it would be a fair housing violation."
"The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws." Some states require disclosures related to stigmatized properties, so make sure you know whether your state requires such disclosures.
A buyer has a 15-year, $250,000 loan with a 5.5% interest rate. How much of the first monthly payment is interest? $1,145.83 $13,750.28 $1,388.89 $916.67
$1,145.83 ($250,000 x 0.055) ÷ 12 = $1,145.83
Using the income approach, determine the value of a property that has a net operating income of $15,000 and a cap rate of 15%. $100,000 $15,000 40% 5%
$100,000 Value = income divided by cap rate. The value of a property is $100,000 ($15,000 ÷ .15 = $100,000).
Joaquin sold his house for $327,600. He bought it several years ago for $139,900 with a $100,000 loan. The loan balance when he sold it was $73,400. What was Joaquin's equity? $114,300 $187,700 $214,300 $254,200
$254,200
Alexandra sells her house to Clark for $178,000. They negotiate to split the transfer tax, which has a rate of $0.33 per $100. What do they each pay to cover the transfer tax? $29.37 $293.70 $58.74 $587.40
$293.70
Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio? $249,000 $299,000 $300,000 There's no way to tell given the data provided.
$300,000
Using the straight-line depreciation method, calculate the total depreciation that would be taken on a commercial building valued a $619,000, not including the value of the land, over a two-year period. $15,871.79 $31,743.58 $7,935.90 Can't be determined with the information given.
$31,743.58 Straight-line depreciation for a commercial building means that you should divide the building's basis ($619,000) by 39 years. The yearly depreciation is $15,871.79, and you'd multiply this by two to get the two-year depreciation total. Remember that land doesn't depreciate.
You're working with buyers who are pre-approved for a loan of as much as $200,000. Assuming they lock in a 5.25% interest rate at closing, how much of their first payment will go toward interest? $824 $825 $874 $875
$875 The formula is loan balance × interest rate ÷ months per year. Loan balance is: $200,000 × .0525 = $10,500; $10,500 ÷ 12 = $875
Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points? $1,000.65 $10,006.50 $9,005.85 $9,585.00
$9,005.85
A small duplex sold for $550,000. Each unit can gross $2,500 in monthly rent for the owner, and there are no additional income sources from the property. What's the GRM? 100 110 200 220
110
Your client Joseph has a commercial income-producing property. How long does he depreciate this property? 27.5 years 39 years Indefinitely Zero years (commercial properties cannot be depreciated)
39 years
Which of the following is the best definition of a township? A 36-square-mile square formed when using the rectangular survey system A one-square-mile square formed when using the rectangular survey system A permanent reference point used in the measurement of elevations The point of beginning used in a metes and bounds survey
A 36-square-mile square formed when using the rectangular survey system
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 A charge of misrepresenting the property for sale A charge of not fulfilling his fiduciary duties to his client by not conducting a complete marketing plan A charge of unfair practice because his mother did not get one of the "Choose Your Neighbor" letters
A charge of agreeing to discriminate by limiting access to the property
What is an encumbrance? A bad neighborhood A defect found during inspection A defect on a title that can be monetary or physical Anything that affects the marketability of a property
A defect on a title that can be monetary or physical
What's the penalty for violating federal do not call rules? A fine of more than $40,000 for each day violations took place A fine of more than $40,000 for each violation Restrictions on all business telephone use Suspension of the violator's business license
A fine of more than $40,000 for each violation
Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in? A deed of trust theory state A lien theory state An intermediary theory state A title theory state
A lien theory state In a lien theory state, the mortgage becomes a lien on the property, but deed remains with the buyer. Foreclosure proceedings in a lien theory state may be more difficult for the lender.
In which of these situations would a listing be most likely to terminate due to listing agreement expiration? A market with high inventory and low demand A market with low inventory and high demand A moderately-priced home in a neighborhood slated for renewal A moderately priced home sold as-is in a market full of investors
A market with high inventory and low demand
Title insurance covers claims by individuals who live or lived on the property in question, as long as what's in place? An affidavit from the resident Approval from the current owner A public record of tenancy A tenant add-on insurance policy
A public record of tenancy
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 Accepting partial performance Suing for damages Suing for specific performance
Accepting liquidated damages All of the answer options are actual remedies to breach of contract, but in this scenario, Kenneth kept the earnest money, which is known as accepting liquidated damages.
The element of a deed that signifies the grantor's intention to transfer title to the grantee is the ______. Act of conveyance Consideration Evidence of title Transference clause
Act of conveyance
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 Amendment Annotation Appendix
Addendum An addendum is a separate form that becomes part of the sales contract.
Which of these is an example of agency coupled with interest? A listing agent agrees to accept a commission of 2.5% upon sale of the property. A listing agent agrees to split the commission on the sale of a property with a cooperating agent who brings the buyer to the table. An agent foregoes buyer agent commission, provided the purchasing developer gives the agent the listings on the developed lots. An agent is interested a property the agent has listed.
An agent foregoes buyer agent commission, provided the purchasing developer gives the agent the listings on the developed lots. Agency coupled with interest means the agent holds an estate (or interest) in a property that is the subject of the agency relationship. Forgoing commission now in turn for listings down the road is an example.
Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur? An agreement between competing firms to standardize commission rates An agreement between individual licensees in a single firm to fix commission rates An offer of a cooperating brokerage commission A public announcement of commission rates charged
An agreement between competing firms to standardize commission rates
Casey signed a contract form offering a purchase price of $309,000 on a home, and gave his agent a $5,000 earnest money deposit. The owner is out of town and her agent can't reach her. At this point, what does Casey have? An executory contract An implied contract An offer A voidable contract
An offer Until the terms are negotiated and the contract is signed by both parties, acceptance hasn't occurred and the sales contract is considered an offer.
What information about a property is the licensee required to disclose to potential buyers? Any known or assumed information about a property Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property Only information that the seller wants the licensee to share with prospective buyers Only information that would make the property sell more quickly
Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property
Which of the following would a home inspector note as a defect in a report due to its link to lung cancer? Asbestos tiles in a basement Cedar shake siding Copper water pipes Old linoleum tiles in a kitchen
Asbestos tiles in a basement
Which one of these situations represents the illegal practice of redlining? Arlo, a licensee, distributed a flyer in several neighborhoods warning of impending commercial developments that would negatively impact property values. Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods. Eunice refused to allow her listing broker to show her house to families with children. Jaime was working with Korean clients, so he focused on showing them homes in Korean communities because he thought they would be more comfortable there.
Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods. Redlining is the practice of selecting geographical areas in which no mortgage loans will be written (based on demographics instead of creditworthiness).
Which of the following is the most serious consequence of treating a customer as a client? Breaching your duty to your actual client Drumming up potential business Wasting your time Working for someone for free
Breaching your duty to your actual client
Cambridge Apartments provides an open parking lot for its residents. There is adequate parking, and all spaces are available on a "first-come, first-served" basis. Alton has multiple sclerosis and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests? As long as the current parking policy were already in place before Alton made application, Cambridge need not make an exception. Cambridge must allow an exception to the first-come, first-served policy for Alton. Cambridge must provide a space for Alton that is no farther than 50 feet from an accessible building entrance. Provided at least two parking spaces per living unit are available, a parking space need not be reserved for Alton.
Cambridge must allow an exception to the first-come, first-served policy for Alton. Reasonable accommodation requirements preserve Alton's right to a reserved parking space that fits his needs.
Overall, how do company checklists assist with agent supervision and help to mitigate risk? Checklists ensure that tasks are completed in a timely manner. Checklists help ensure that agents and staff don't miss steps in a process. Checklists provide a method for brokers to track agent training. Completed checklists in transaction files prove that agents completed all tasks.
Checklists help ensure that agents and staff don't miss steps in a process.
Johannes must obtain a permit for a construction project that is located right next to a wetlands. Which federal law or regulation requires him to get the permit? Army Corps Construction Regulations Clean Water Act Coastal Zone Management Act Rivers and Harbors Act
Clean Water Act The Clean Water Act protects wetlands and other waterways.
Which of the following is an example of a universal agent? Buyer's agent Conservator Escrow officer Listing agent
Conservator A universal agent has broad authority to act on behalf of the principal, such as a person with a power of attorney or a conservator.
Which of these situations represents the illegal practice of blockbusting? Celia, a licensee, distributed a flyer in several neighborhoods, claiming that gentrification of those neighborhoods will increase property values. Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values. Estelle, a broker, warns potential clients about the upcoming zoning change in a neighborhood that is currently zoned as residential. Kian, a mortgage broker, refuses to underwrite mortgage applications from applicants who are Hispanic or Asian.
Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values. Blockbusting is the practice of convincing homeowners that a demographic shift could result in reduced property values or the inability to sell their properties.
Which of the following could be an indication of a foundation problem? Crack in a basement wall Doors that open and close easily Lack of moisture in the basement Windows that open and close properly
Crack in a basement wall
State usury laws are typically not applicable to what type of lending? Consumer loans Credit cards Loans from private lenders Personal loans
Credit cards
A decrease in property value over time is called ______. Amortization An anomaly Appreciation Depreciation
Depreciation
Ned represents Sofia in the sale of her townhome. Luciana represents Sofia's buyer, Arturo. What is Luciana's responsibility to Sofia? Assist Sofia in the performance of tasks that Sofia needs to accomplish in order to get to a successful closing. Contact the tax assessor's office for an estimate of the real property taxes. Disclose that the buyer is a registered sex offender. Disclose that the buyer will not have the funds for the down payment unless he sells his current home.
Disclose that the buyer will not have the funds for the down payment unless he sells his current home. Luciana will not provide direct services for Sofia but must make required disclosures, including material adverse facts and conflicts of interest.
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 Down payment Gap financing Usury
Discount points
Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal? Document health and safety issues that may affect both the cost and enjoyment of the home. Estimate how much cosmetic upgrades may cost the buyers. Verify lot lines and acreage calculations. Verify the presence of any easements or encroachment on the property.
Document health and safety issues that may affect both the cost and enjoyment of the home.
A part of your property is used by the local utility company to maintain its power lines. What's this an example of? Easement Eminent domain Encroachment Illegal use
Easement An easement allows a person the right to use or cross over another's property for a specific reason.
_______ provide a limited right to use a property for a specified purpose. Easements Encroachments Setbacks Shared structures
Easements
Derrick was thrilled to find out that the land he purchased includes several small caves. He's been spelunking for about three years and looks forward to exploring the caves on weekends. Which real property right allows him to do so? Disposition Enjoyment Exclusion Possession
Enjoyment
Which one of the following tasks must licensees perform for seller clients? Dictate the listing price of the property. Drive the sellers around to show them other properties that are for sale in their neighborhood. Ensure that the buyer's earnest money is deposited. Show the sellers how they can market their property.
Ensure that the buyer's earnest money is deposited.
What's the best definition of personal property? Artificial attachments to land that include things such as fencing, buildings, and walkways Everything that's not real property Land Property that's fenced
Everything that's not real property
After he missed several payments, Eli's lender sent him a delinquency notice. He tried to make the payments, but continued to miss additional payments. His lender sent him a notice of default, and eventually seized and sold his property after he failed to repay them. What process did Eli experience? Acceleration Alienation Foreclosure Redemption
Foreclosure
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. Frances is guilty of commingling and conversion. Frances is guilty of conversion. Frances is guilty of fraud.
Frances is guilty of commingling.
Deb, a licensee, is unhappy with the marketing materials a local company produced. While having coffee with Irving, a licensee with another firm, she tells him about her troubles and recommends he not do business with this company. Irving agrees and even volunteers to spread the word among his colleagues. What's this an example of? A tie-in arrangement Group boycotting Market allocation Price fixing
Group boycotting
Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He's able to do this in part because of the ______ offered by the USDA Farm Service Agency. Capital Grants Guaranteed loans Secondary market for agricultural loans
Guaranteed loans The USDA Farm Service Agency offers guaranteed loans to agricultural lenders.
Chad, a landlord, made a pass at one of his tenants. She refused his advances, and her rent increased the following month. The other tenants didn't receive a rent increase. How did Chad violate fair housing law? He created special terms for a tenant based on familial status. He created special terms for a tenant based on sex. He refused to make reasonable accommodations for a tenant who is disabled. He refused to rent to an applicant based on sex.
He created special terms for a tenant based on sex.
Christy found a property that was for sale by owner and made an offer. The seller accepted Christy's offer, but neither of them knew how to proceed. Licensee Zelda helped Christy complete the necessary purchase documents and walked her through the process. What kind of agency exists? Confirmed agency Express agency Implied agency Verbal agency
Implied agency Christy and Zelda never signed a formal agency agreement, but through Zelda's actions in her attempt to help Christy, she created an implied agency agreement.
Larry is assisting a buyer who's making an offer on his client's listing. If Larry is too helpful to the buyer, what might occur? A potential bonus from the buyer Implied agency and undisclosed dual agency Implied friendship Undisclosed single agency
Implied agency and undisclosed dual agency One danger in implied agency is the possibility for undisclosed dual agency.
Your home inspector Mason found some discoloration in the attic and near the windows on the second floor. Why does he think this may be a concern? Dark stains in the attic could mean plumbing problems. It could be a sign of fire damage. It means that the homeowners haven't insulated well. It's indicative of insect activity.
It could be a sign of fire damage. Discoloration in the attic or around windows and doors can be signs of a previous fire. The discoloration could be from smoke moving to the highest level of the house or escaping out openings in the home.
Which of the following is a key fact to remember about E&O insurance? All real estate professionals (licensed and unlicensed) must carry insurance. E&O insurance isn't permitted at the licensee level, only at the broker level. It doesn't cover all situations encountered in real estate. It's not considered a risk prevention measure.
It doesn't cover all situations encountered in real estate. Errors and omissions (E&O) insurance is one way to reduce risk, although it doesn't cover all situations.
Why is proof of ownership required when transferring real property? It places the new owner's name on the deed. It provides evidence that the title is marketable. It provides proof that property taxes have been paid for the property. It verifies the property address.
It provides evidence that the title is marketable.
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. Perform the tests yourself. Refuse to be a part of the transaction. Support Eric in his decision and do nothing further.
Keep records of your recommendations and a written response from Eric.
Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death? Lucas Lucas and Tom Lucas, Monique, and Amy Lucas, Tom, Amy, and Monique
Lucas and Tom Joint tenants are allowed to sell their interests, so Tom became a property owner when Ivan sold his interest. However, joint tenancy is not inheritable but instead includes the right of survivorship. Trace's and Chad's interests passed to Lucas and Tom.
"Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road Southwesterly from the dwelling house of the late Bethany Smith ..." is an example of what type of legal description? Benchmark Lot and block Metes and bounds Rectangular
Metes and bounds This is an example of a metes and bounds legal description.
Which of the following is an example of commingling? Mixing earnest money with personal funds Mixing two earnest money deposits Paying licensee bonuses from forfeited escrow deposits Using escrow funds to pay business expenses
Mixing earnest money with personal funds
Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers? Broadcast clause Marketing clause Multiple listing clause Provisionary clause
Multiple listing clause This is the MLS clause.
Corinne is 68 years old and employed full time. She's of Spanish descent, is raising her 12-year-old grandson, and lives with her partner, Katherine. She requires an accessible apartment because she uses a wheelchair. Under which of the following federally protected classes might Corinne be protected if she faces housing discrimination? Age, employment status, national origin, familial status, and sexual identity Age, race, familial status, sexual identity, and disability National origin, sex, disability, and familial status Religion, familial status, and disability
National origin, sex, disability, and familial status Federal fair housing laws don't name age, employment status, or sexual identity as protected classes. Corinne would be protected if she experienced housing discrimination based on her national origin, sex, disability, or familial status.
Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately? Graduated Gross Net Percentage
Net A net lease is one in which the tenant pays some extra expenses—such as taxes, maintenance, or insurance—for the property.
Julius sold one of his investment properties and used the proceeds of the sale to invest in some equipment for one of his other businesses. Can he defer the capital gains taxes on the sale of the investment property? No, because capital gains are always due in the same tax year as the sale. No, because the purchase was not a like-kind property. Yes, because he reinvested the money. Yes, because his accountant applied for a waiver.
No, because the purchase was not a like-kind property.
Robert is the general contractor for a home being constructed in a new development. The foundation has been poured, and he's working with the homeowners to make some decisions that weren't identified in the blueprints he's working from. Which of the following details are guided by local building codes? Material used for shingles Number and type of electrical breakers Number and type of windows per square foot Placement of gas range in the kitchen
Number and type of electrical breakers
On what type of listing (or listings) may a net listing be used in states where they are legal? Exclusive right-to-sell listings only Open, exclusive agency, or exclusive right-to-sell listings Open listings only Open or exclusive agency listings only
Open, exclusive agency, or exclusive right-to-sell listings
Because there were no deadlines specified in the contract, Myron didn't think there was a problem if he waited to apply for a loan to help purchase the property. He was therefore a little surprised and not very happy when the seller sued him for breach of contract, stating that the delay was impacting the seller's ability to purchase a new home. What did Myron fail to do? Complete his loan application correctly. Notify the seller that he had a loan contingency. Perform his contractual obligations within a reasonable time. Talk to the seller about the seller's contingency to sell his house in order to buy another property.
Perform his contractual obligations within a reasonable time.
Which group ensures that community growth is controlled and orderly? HOA Master commission Planning board Zoning board of appeals
Planning board The planning board ensures that community growth is controlled and orderly. It is also responsible for developing the master plan, which includes budgeting for long-term projects.
Which of the following should be avoided because it can attract thieves? Giving referrals Posting friend requests Posting photos of your clients' expensive belongings Turning off location information
Posting photos of your clients' expensive belongings
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted? Appraisal Cost Price Value
Price
The fewer properties on the market, the greater the scarcity. What's the effect on prices? Prices are pushed downward. Prices are pushed upward. Prices remain the same. There's no correlation between scarcity and price.
Prices are pushed upward.
Deirdre lost her job, and the bank foreclosed on her condo. Which of the following of her outstanding debts will the bank pay first? Credit card balance Medical bills Property taxes Student loan
Property taxes
When modifying commercial buildings to meet accessibility requirements, owners should focus their attention on these four areas: ______, access to goods and services, access to restrooms, and any other necessary measures, such as access to public amenities. Installing more restrooms Moving all of their operations to the first floor Posting detailed floor plans by elevators and stairways Providing an accessible approach and entrance
Providing an accessible approach and entrance
Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he'd buy it from Hank for $80,000, which Hank agreed was a fair price. It's two months later, and Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable? Drew didn't have the financial resources to make the offer. Real estate contracts must be in writing. There was no offer and acceptance. This wasn't a legal purpose.
Real estate contracts must be in writing.
What's the best definition of real property? Artificial attachments to land that include things such as fencing, buildings, and walkways Earth, soil, and air Land, plus all things permanently attached to it naturally or artificially Real estate, plus all of the interests, benefits, and rights included in ownership
Real estate, plus all of the interests, benefits, and rights included in ownership Real property includes real estate, plus all of the interests, benefits, and rights included in ownership.
How can you determine lot size, easements, and encroachments of a property? Select the answer that would provide the most comprehensive search. Check the county recorder's office and local building board. Research the deed and title history, check maps at the county recorder's office, and review land surveys. Review subdivision maps, pace off the property, and check tax records. Search the property's deed and title history, ask the neighbors, and pace off the property.
Research the deed and title history, check maps at the county recorder's office, and review land surveys. To determine easements, encroachments, and lot size, research the deed and title history, check maps at the county recorder's office, and review land surveys.
Sam grants Steve a license to hunt deer on his property. Which of the following statements about the license is true? Sam can revoke the license at any time. The license is a permanent privilege. The license is assignable. The license is inheritable.
Sam can revoke the license at any time. A license is temporary, and at the discretion of the property owner. A license is not assignable or inheritable.
Evan bought into a housing cooperative that's focused on cultural exchange. Each month, the co-op residents have dinner meetings and share food and information about the culture of their respective regions. When Evan made his purchase, he received a proprietary lease for his unit. What else did he receive? Contract of mortgage Deed Plat maps Shares in the cooperative corporation
Shares in the cooperative corporation
Which one of the following definitions best describes a consumer? Someone who is hired to act on behalf of a client Someone who is in a position of trust and loyalty Someone who is involved in a transaction but represents neither party Someone who uses or purchases a product or service
Someone who uses or purchases a product or service
You know a property's effective gross income and its operating expenses. How would you calculate the net operating income? Add income to tax deductions. Multiply annual return by .05 of the property's value. Multiply monthly income by 12. Subtract operating expenses from effective gross income.
Subtract operating expenses from effective gross income. Net operating income is effective gross income, minus operating expenses.
A buyer who discovers after closing that a seller wasn't honest about the property condition on the required disclosures can ______. Cancel the agreement and locate another property File a claim with the state commission Get a refund of the earnest money Sue the seller
Sue the seller
In investments, there are two types of depreciation, and each is defined by a particular event. Which of the following most accurately pairs the depreciation type with the event it is tied to? Economic depreciation and cost recovery Operating depreciation and taxing authority Tax depreciation and cost recovery Tax depreciation and physical deterioration
Tax depreciation and cost recovery Tax depreciation is tied to cost recovery.
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 The crumbling driveway The lack of closets The slate roof
The 100-year-old wiring
After a few meetings, the Stinsons sign a listing agreement with broker Vera so she can sell their house. The house has already generated interest from a potential buyer named Sergei, who has spoken with Vera about the house's price and square footage. Which of the following is true about this situation? Because Vera now has a sub-agency relationship with the Stinsons, she shouldn't talk to Sergei until the house is officially on the market. The Stinsons and Vera have brokerage relationship agreement. Vera has an agency agreement with Sergei. Vera should disclose the dual agency that has been created by her direct assistance to the buyer
The Stinsons and Vera have brokerage relationship agreement.
Which one of the following is a description of economic depreciation? Investors can take a business deduction for annual depreciation. The asset is worth less because the economy took a downturn. The asset is worth more because of capital improvements. The owner/investor is making less income from the property than previously.
The asset is worth less because the economy took a downturn.
Simone can't believe that her client won't let her put a lockbox on the property. How does he expect other agents to be able to show the home? Oh well, it's not as if he's asking her to do something illegal. The client's wish is her command. What fiduciary duty is this an example of? The duty of accounting The duty of loyalty The duty of obedience The duty of reasonable skill and care
The duty of obedience
A family of four, with children ages six and nine, is denied the opportunity to view an available unit in housing intended for older persons. Which of the following statements is true? The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons. The federal Fair Housing Act allows an exemption for communities that don't have playgrounds or play areas for children. This is a violation of the federal Fair Housing Act because it discriminates on the basis of age. This is a violation of the federal Fair Housing Act because it discriminates on the basis of familial status.
The federal Fair Housing Act allows an exemption for communities that are designed and operated for older persons.
Kelly is closing on the house she's purchasing on Wednesday. Which of these statements is true? Kelly must receive the Loan Estimate at least four days before closing. The closing officer must deliver the Closing Disclosure at closing. The lender must provide the Closing Disclosure by Friday of the week before closing. The Loan Estimate amounts must be within 1/4 of a percent of the final settlement costs.
The lender must provide the Closing Disclosure by Friday of the week before closing.
Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he's placed on it, though his agent told him it's underpriced. Rex's distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn't legally competent to manage his business affairs; the judge agrees. What's the status of the listing agreement? It's still valid; Rex's family must abide by it. Rex's agent can continue to market the property, but Rex's family must approve the sale. The listing agreement is terminated by force of law. The listing is temporarily on hold until a court gives permission to invalidate it or until the listing expires.
The listing agreement is terminated by force of law.
Quad City National Bank has several REO properties on its books. Why does the bank own these properties? Quad City is in the process of foreclosing on these homes. The bank purchased the properties as investments. The bank purchased these properties from owners who were in foreclosure. The properties went through the foreclosure process and didn't sell at auction.
The properties went through the foreclosure process and didn't sell at auction. When a bank forecloses on a property and tries but fails to sell it at auction, the bank then takes title to the property. The property becomes REO—real estate-owned—and the bank attempts to sell it through regular channels.
When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true? State and local law override federal law. State lawmakers decide which law prevails. The conflicting law is invalidated, effectively removing the law's requirements. The state law may not remove rights granted to citizens under the federal law.
The state law may not remove rights granted to citizens under the federal law.
Which type of antitrust violation occurs when the providing of one service is made dependent on the customer or client obtaining another recommended service? Group boycotting Market allocation Price fixing Tie-in arrangement
Tie-in arrangement Tie-in arrangements are antitrust violations that involve predicating one service on the consumer purchasing another from a recommended company. These arrangements severely limit choices for consumers.
Jeff has filed a quiet title suit against Roger. What's the purpose of this suit? To clear up a cloud on title To clear up a property line dispute To exercise his right to quiet enjoyment of the property To prohibit the seller from releasing the buyer's name
To clear up a cloud on title
What's the purpose of a buyer representation agreement? To disclose brokerage relationship options to consumers To establish an exclusive agent/buyer relationship To limit the duties a licensee may perform for a consumer To register an agency as a real estate brokerage firm
To establish an exclusive agent/buyer relationship
A living trust differs from a testamentary trust in that a living trust is established to convey property as well as to ______. Dictate terms of care in the event the trust creator becomes incapacitated Hasten the probate process Shelter income from taxation Transfer ownership before death and avoid probate
Transfer ownership before death and avoid probate
In a real estate transaction in which you represent the seller, your duty to other parties is to ______. Be honest in all matters that do not affect your client's interests Be polite and courteous Maintain the confidentiality of all matters that other parties disclose to you Treat them honestly and fairly
Treat them honestly and fairly You must treat other parties in the transaction honestly and fairly, and you must disclose all material facts.
How long does the borrower have to pay private mortgage insurance? 12 years 20 years Until 50% of the original loan is paid off Until the borrower reaches a 22% equity position
Until the borrower reaches a 22% equity position PMI is cancelled when a borrower reaches a 22% equity position. This is based on payments of principal made toward the original loan balance and not on current market value.
Hope's mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this? General Special assessment Vendor's Voluntary
Voluntary A mortgage is a voluntary lien. With voluntary liens, people agree to have the lien placed against their real or personal property.
Your buyer client Gwen wants to learn as much as she can and asks a lot of questions. Which of the following of Gwen's questions could you answer while staying within your scope of expertise? Do the wood shavings outside the basement window mean there are termites in the home? Is the mold in the basement the dangerous kind? What are the property taxes for this property? Will an investment in this property lower my income taxes?
What are the property taxes for this property?
Burt terminated his exclusive right-to-sell listing agreement with Scott, his listing broker, without cause. Burt may legally do this as long as he's ______. A real estate licensee Unhappy with Scott's services Willing to find his own buyer Willing to pay Scott's commission anyway
Willing to pay Scott's commission anyway Sellers who terminate before the listing period is complete may owe commission anyway.
Manuel is selling his home to Selena. He has an existing loan that he'll continue to make payments on, and he's extending credit to Selena for the balance of the purchase price. She will make monthly payments to him. What type of financing are the parties using in this transaction? Home equity loan Loan amalgamation Refinance Wrap-around loan
Wrap-around loan
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? It doesn't fit aesthetically with the rest of the house. The extra bedroom is inconsistent with the rest of the neighborhood, reducing its value. You're certain it's not built to code, so Peter shouldn't make an offer on the property. 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.
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.
