Chapter 11 "Real Estate Contracts" and Chapter 7 "Real Estate Contracts" (MD)

Which statement is true about the use of a lot, block, section and similar references to a subdivision plat for property descriptions? 1. They are sufficient if the plat referred to was properly recorded. 2. They must be prepared by a licensed real estate broker. 3. They are not sufficient for sales agreements but are good enough for listings. 4. They are sufficient for listings but not for sales agreements

1

Real estate sales agreements and listings use property descriptions. Which of the following is TRUE about the use of lot, block, section -- and similar references to subdivision plat -- for such description? 1. they are sufficient if the plat referred to was properly recorded 2. they must be prepared by licensed real estate brokers 3. they are not sufficient for sales agreements but are good enough for listings 4. they are sufficient for listings but not for sales agreements

1. they are sufficient if the plat referred to was properly recorded References to the recorded plat of subdivision are sufficient to describe lots within that subdivision. They are used both in listing and in sales agreements.

Which is true of location drawings? 1. They are essentially the same as boundary surveys. 2. They are appropriate for typical residential resales. 3. They cost more than boundary surveys. 4. They can properly be used for placing fences and other improvements

2

Which is TRUE of location drawings? 1. they are essentially the same as boundary surveys 2. they are appropriate for typical residential resales 3. they cost more than boundary surveys 4. they can properly be used for placing fences and other improvements

2. they are appropriate for typical residential resales A location drawing shows that the improvement is actually on the lot an shows other basic facts. Placing fences, however requires a boundary survey, which is usually more expensive.

Which of the following is most likely to be a sufficient legal description for the sale of land? 1. 142 Pinehurst Rd., Ocean Pines 2. That lot fronting 100 feet on Pinehurst and being 250 feet deep. 3. That 2 acres, shown on attached plat of subdivision survey as prepared by Landsman and Company, surveyors of Catonsville Maryland 4. 1776B Liberty St., Snowhill, MD being the north half of a duplex

3

Which of the following is true of property descriptions used to most Maryland real estate transfers? 1. They refer to the government rectangular survey system. 2. They consist of the street or mailing address of the properties. 3. theyre based on recorded plats of subdivisions or meets and bounds data. 4. They consist of PO Box numbers

3

Which of the following is MOST likely to be a sufficient legal description for the sale of land? 1. "142 Pinehurst Road, Ocean Pines" 2. "That lot fronting 100 fee on Pinehurst and being 250 feet deep" 3. "That two acres, shown as prepared by Landsman & Co., Surveyors of Catonsville, Maryland" 4."1776B Liberty St., Snow Hill, MD, being the northern half of a duplex

3. "That two acres, shown as prepared by Landsman & Co., Surveyors ofCatonsville, Maryland" The description is dignified by reference to the recoded plat of subdivision for its details. The other choices lack material details such as adequate boundaries an other dimensions.

Which of the following is TRUE of property descriptions used in most Maryland real estate transfers? 1. they refer to the government rectangular survey system 2. they consist of the street or mailing addresses of the properties 3. they are based on recorded plats of subdivision or metes-and-bounds data 4. they consist of post office box numbers

3. they are based on recorded plats of subdivision or metes-and-bounds data Most Maryland legal property descriptions use either the metes-and-bounds or the recorded plat of subdivision method. For convenience, street address and post office box numbers may appear, but they are not part of the actual legal description. Baltimore City, however, uses a system of parcels on numbered blocks.

Of which kind of legal description is this example? "Beginning at the intersection of the east line of Goodrich Boulevard in the south line of Jasmine Lane and running south along the east line of Goodrich Boulevard a distance of 230 feet, Then easterly parallel to the north line of Wolf Road, a distance of 195 feet, then north easterly on a course of N 22° east, a distance of 135 feet; And then northwesterly along the south line of Jasmine Lane to the point of beginning" 1. Block 2. rectangular survey 3. subdivision 4. meets and bounds

4

"Beginning at the intersection of the east line of Goodrich Boulevard and the south line of Jasmine Lane and running south along the east line of Goodrich Boulevard and distance of 230 feet; thence easterly parallel to the north line of Wolf Road, a distance of 195 feet; thence northeasterly on a course of N 22 degrees E, a distance of 135 feet; and thence northwesterly along the south line of Jasmine Lane to the point of beginning." What kind of legal description is this an example of? 1. block 2. rectangular survey 3. subdivision 4. metes-and-bounds

4. metes-and-bounds This description makes use of distances, compass directions, and monuments to describe a parcel in outline - all characteristic of metes-and-bounds surveys.

Listing Agreement

A _____ ______will identify the property owner(s) and the property, describe the property improvements, list any loans held by the owner and their current status, itemize loan and other payments on the property, and provide the details of a short sale, if the lender is willing to accept one.

General Agent

A real estate salesperson is a ____ general agent of the broker and can carry out listing services only in the name of and under the supervision of a broker.

2 of 10 - Which of these is not a true statement? A. A purchase offer is a binding contract between the buyer, the seller and their agents. B. If a seller changes the terms of the offer to purchase, he has created a counteroffer. C. An offer or counteroffer can be withdrawn at any time before it has been accepted. D. Once the offer or counteroffer is accepted and the offeror has been notified, a legal contract is formed.

A. A purchase offer is a binding contract between the buyer, the seller and their agents.

10 of 10 - When presenting information about the buyers to the sellers, which piece of information might not be useful in helping the sellers make a decision? A. The buyers' family is pressuring them to purchase this home. B. The buyers have been pre-qualified by a lender. C. The buyers are interested in another property. D. The buyers love the landscaping improvements the sellers have made.

A. The buyers' family is pressuring them to purchase this home.

Buyer Representation Agreement

A___ ___ ____is an employment contract in which a prospective property buyer employs a broker for the purpose of finding a suitable property.

Listing Agreement

An employment contract between a real estate broker and a property seller.

A home warranty will protect which of the following for the first year of occupancy

Appliances HVAC Plumbing fixtures

Agent; Broker; Principal

As an ____ the ____ is authorized to represent the ____ and the principals real estate to consumers.

When does the listing agent typically present an offer to the seller

As soon as the offer is received

Exclusive Agency Listing

Authorizes one broker to act as the sole agent of the seller, but allows the seller to retain the right to sell the property without obligation of payment yo the broker.

4 of 10 - Who typically presents an offer to the sellers? A. Selling broker B. Listing agent C. Listing broker and selling broker D. Selling agent

B. Listing agent

7 of 10 - Most sellers object to offers based on: A. Closing issues B. Offering price C. Financing issues D. Contingencies

B. Offering price

use of risk based capital requirements are

BOTH insurers must have a certain amount of capital depending on the riskiness of their investments and insurance operations AND insurers may be requires to take certain actions depending on how much capital have have relative to their risk based capital requirements

reasons for regulation of insurance include which of the following

BOTH maintaining insurer solvency AND ensuring reasonable rates

regulation of life insurance companies

BOTH the percentage of assets a life insurance company may invest in a specific type of asset is generally limited by law AND the purpose of limiting the accumulation of surplus is to prevent an insurer from increasing its surplus at the expense of policy owner dividends

When an offer is received, the owner should be made aware that

Both a counteroffer really rejects the offer and once rejected, an offer cannot be accepted. (So if reasonable, it should be accepted).

1 of 10 - Jake has received two offers on one of his listings. The home is listed at $210,000. One offer is for $208,000; the other is for $200,000. What should Jake do? A. Present the $208,000 offer today and wait for a response from the sellers before he presents the other offer. B. Present the $200,000 first and recommend rejection. Then present the $208,000 offer. C. Present the $208,000 offer and the $200,000 offer together at the same presentation meeting. D. Hold both offers because he heard that a full-price offer is on its way.

C. Present the $208,000 offer and the $200,000 offer together at the same presentation meeting.

9 of 10 - When you believe an offer is both fair and reasonable but it does not meet the sellers' asking price, you should: A. Make no recommendations and let the sellers decide on their own. B. Recommend a counteroffer back to list price. C. Work toward acceptance. D. Recommend that the seller delay response to make the buyer nervous and then submit a counteroffer.

C. Work toward acceptance.

To mingle or mix, for example, a client's funds in the broker's personal or general account, is known as

Commingling

The unlawful appropriation of another's property or funds is known as

Conversion

3 of 10 - Which of these is not a good thing to do when writing a counteroffer? A. Fill out a separate, numbered counteroffer form. B. Rewrite whole paragraphs to ensure clarity. C. Date and attach supporting documents. D. Exert pressure on the sellers to include something the other party wants.

D. Exert pressure on the sellers to include something the other party wants.

8 of 10 - When you receive an offer on a listing for less than asking price, you should not: A. Study the other terms of the offer so that you can maximize the offer's benefits and minimize the lower price. B. Set up a face-to-face meeting with the sellers as soon as possible. C. Prepare additional documentation to take to the presentation. D. Give the sellers the price over the phone so that they can think about it before you meet with them.

D. Give the sellers the price over the phone so that they can think about it before you meet with them.

6 of 10 - Which of these statements about counteroffers is not true? A. A counteroffer represents a rejection of an offer. B. A counteroffer by a seller to a buyer turns the seller from offeree to offeror. C. A counteroffer can give the buyers an "out" if they want one. D. If the buyer rejects the first counteroffer, the seller can accept the first offer.

D. If the buyer rejects the first counteroffer, the seller can accept the first offer.

5 of 10 - Once an offer has been accepted, the agent should do all of the following except which? A. Make sure all required disclosures have been done. B. Attend the final walkthrough. C. Be sure all requested inspections have been ordered. D. Meet with the buyers' lender to ensure they're getting a good deal.

D. Meet with the buyers' lender to ensure they're getting a good deal.

A desirable neighborhood will typically have an abundance of active listings

False

Buyers should make an offer immediately after viewing a property

False

Multiple counter-offers are illegal in California

False

Termite inspections are required on all homes built prior to 1978

False

The buyer's agent should do which of the following for their client

Fully explain their client's offer

Which of the following series as insurance for the homebuyer

Home warranty

regulation of insurance company investments

I ONLY the purpose of regulating insurance company investments is to prevent insurers from making unsound investments which could threaten their solvency

state insurance guaranty funds

I ONLY they limit the amount that policy owners can collect if an insurer becomes insolvent

which of the following statements about the licensing of insurance companies is true

I ONLY a new capital stock insurer must meet minimum capital and surplus requirements, which vary by state and line of insurance

Net Listing

In a ____ _____, the broker is entitled to any amount exceeding the seller's stated net proceeds.

Source of Compensation

In a brokerage relationship, the __ ___ ___does not determine the relationship of the parties and compensation is always negotiable.

Exclusive Listing Agreement

In all states, the ____ ____ ____ must be in writing to be enforced.

Exclusive Right to Sell

In an _____, one broker is appointed as the seller's sole agent, and if the property is sold while the listing is in effect, the broker is entitled to a commission, no matter who sells the property.

Exclusive Buyer Representation

In an___ ____ ____ agreement! the buyer works with only one broker! but the broker is free to represent other buyers.

In a seller's market, prices generally

Increase

A seller must provide the buyer with all necessary disclosures during the

Inspection period

Multiple Listing Service (MLS)

Is a marketing organization whose broker members make their own exclusive listings available through other brokers who participate in the MLS and gain access to other brokers' listed properties as well.

premium taxes

NEITHER I or II

Which of the following would constitute an acceptance?

None of these. Accepting the offer verbally with a promise of a later written confirmation. Accepting the offer but conditioning the acceptance on a different escrow office than specified in the offer. Accepting an offer but changing the closing date. (Must be accepted in writing without any conditions or variance).

Multiple Listing Clause

Permits cooperation with other brokers in the multiple listing service (MLS)

A broker's commission is typically based on a percentage of the

Sales price

For listing agents, selling real estate involves three separate sales. Which of the following is NOT one of the three?

Selling the lender on making the loan (This is not a sale. No persuasion).

From the real estate agent's perspective, selling real estate involves which of the following

Selling the owner on the listing Selling the buyer on the offer Selling the seller on the acceptance

Exclusive Listing

Should have a definite termination date and should not have an automatic extension provision.

In addition to a home inspection, what other inspection can a buyer obtain

Termite inspection Septic inspection Well inspection

Special Agent

The broker is a ___ ____ of the seller.

Who typically pays for the home inspection

The buyer

Compensated

The buyers broker will be _____by a retainer, a flat fee for defines! an hourly rate! a percentage of the purchase price! or some combination of these methods.

Who typically presents an offer to the seller

The listing agent

Personal Property; Fixtures

The listing agreement must specify any __ ___that will be included in the sale of the real estate, as well as any _____ or other items that will be excluded from the sale.

In making a counter-offer, the seller may counter which of the following terms

The offer price The proposed occupancy date The amount of earnest money required

Which of the following is the most common objection to a buyer's offer

The price

Comparative Market Analysis

The sales associate makes a ___ ___ ____ to help the seller have a realistic idea of the price range in which the subject property falls.

When a listing agent presents an offer to the seller, which of the following information is described

The sales history of the listing Information about the buyer The terms of the offer itself

Home Warranty

The seller may make a ___ ____policy available for the buyer.

Open Listing (non-exclusive)

The seller retains the right to employ any number of brokers; the seller is obligated to pay a commission only to the broker who produces a ready, willing, and able buyer; and the seller is not obligated to pay a commission if he sells the house without the aid of a broker.

Broker protection clause

This clause provides that the property owner will pay the listing broker a commission if within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner.

A buyer's agent should run comps on a property prior to their client making an offer

True

A counter-offer voids the original offer

True

A seller will typically receive more offers in a seller's market compared to a buyer's market

True

Escrow is opened after a prospective buyer's offer is accepted by the seller

True

Home inspections are required when qualifying for an FHA loan

True

If there are not too many active listings in the marketplace, the listing agent may be able to increase the listing price

True

Listing agents have a duty to protect their client from fraudulent practices

True

Listing agents must disclose to buyers if there is a multiple counter-offer situation

True

Real estate agents must always put their clients's interests before their own

True

Unless stated otherwise, the buyer's agent has the right to present an offer in-person

True

Listing Presentation

Usually made by a sales associate of the broker and is the job interview with a prospective client-the property owner.

Disclosures

______ of agency relationships and property condition are important consumer safeguards and may be required by state law.

an insurance company chartered in another country has been licensed to operate in your state. In your state, the insurer would be considered an

alien insurer

In making an appointment to present an offer, the agent should

arrange to have all owners present for the presentation. (Without all owners, it can't be accepted).

the policy holders' surplus of an insurer is defined as the difference between its

assets and its liabilities

The sales price is really set by the

buyer. (What the buyers will pay, not what sellers want).

under what type of rate regulation are insurers required to obtain approval of rates before using them if the rate change exceeds a specified predetermined range

flex rating law

an insurance company incorporated in another state has been licensed to operate in your state. In your state, the insurer would be considered a

foreign insurer

all of the following statements about the methods of regulating insurance are true EXCEPT

insurers are totally exempt from regulation by federal agencies and laws

When presenting multiple offers the agent should

keep in mind their first duty is to the owners, not to themselves or their firm. (Present all offers together fairly).

under one type of rate regulation, insurers are not required to file their rates with the state insurance department. However, insurers may be required to furnish rate schedules and supporting data to state officials. A fundamental assumption underlying this type of rating law is that market forces will determine the price and availability of insurance, rather than discretionary acts of regulators. this type of rate regulation is called

no filing required

which of the following is considered a non-admitted asset for an insurer

office furniture

the right of the states to regulate the business of insurance was first established by

paul v virginia

The seller's MOST common objection to an offer is

price. (Owners are most interested in the bottom line).

An agent who receives an unreasonable offer on their principal's property should generally

recommend to the owner to counter the offer (There is still the possibility of a sale).

A purchaser who obtains owner-financing and fails to apply rent payments to the loan payments may be guilty of

rent skimming. (Keeping rent receipts until foreclosed).

the basis for current state regulation of insurance is

the mccarran- ferguson act

by misrepresenting the true facts, gretchen was able to convince a client to drop a life insurance policy with another company and to purchase a policy from the company that gretchen represents. Gretchen has engaged in an illegal sales practice called

twisting

The three stages of presenting an offer include all of the following EXCEPT

why the owners should deal with your firm. (This has to do with listing).