FL RE Practice exam questions

While reviewing her purchase contract, Jeanette's client asked, "What does this inspection contingency do?" How should Jeanette frame her response?

"The inspection contingency is designed to protect you in case the home inspector finds something wrong with the property that can't be fixed or that makes you uncomfortable." - A general statement explaining the purpose of the contingency is appropriate. Interpreting the implications of what happens if the buyer terminates the contract is an example of unauthorized practice of law.

Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?

$1,042.29 - In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).

A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400' deep. What was the price per front foot of the property?

$1,335.67 - First, find the square footage (5.5 x 43,560' = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.

If Johnson Marketing's capital gain on the sale of it's business is $479,000, capital improvements were $227,000, and the adjusted basis in the property was $976,000, what was the sales price?

$1,455,000 - Sales price - adjusted basis = capital gain, so capital gain plus adjusted basis = sales price.

Sharla just refinanced her home with a 10-year loan of $18,000. Her interest rate is 2.125%. How much will Sharla pay per month for interest on her loan?

$31.88 - The formula to calculate this is: (loan balance x interest rate) ÷ 12 months = interest paid. In this case, that works out to: ($18,000 x .02125) ÷ 12 = $31.88.

Calculate 10 months' interest on a $12,500 loan at 6.5%. Round to the nearest dollar.

$677 - Figure out the annual interest by multiplying the loan amount by the rate. Once you have the annual interest, divide by 12 months to determine the monthly interest. From there, multiply the monthly interest by the number of months.

A property has an annual before-tax cash flow of $100,000 and income taxes of $12,000. The investor has $2 million invested in this property. What is the investor's cash-on-cash return?

5% - To compute cash-on-cash, divide the amount invested by the cash (annual income) returned. The investor has invested $2 million cash and is receiving $100,000 cash. $100,000/$2,000,000 = .05 or 5%.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate?

6.5% - Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

If the Florida Real Estate Commission consisted of four brokers, one sales associate, and one consumer, whom could the governor appoint to the complete the commission?

A consumer who does not have a license - In this scenario, the governor is looking for a consumer, as the commission already has five licensed members and only one consumer. The governor will also need to make sure that at least one of the committee members is 60 years of age or older.

What's a benchmark?

A permanent reference point for marking datums - Benchmarks are permanent markers used for marking datums.

Which of these photo descriptions may be a potential MLS violation?

A photo of the master bedroom, including the bed, dresser, and jewelry armoire - Uploading a photo of the jewelry armoire or other seller valuables can potentially breach the seller's privacy or security and encourage burglaries.

Which of the following is true about positive misrepresentation?

A principal was harmed by the misstatement. - There are four elements to positive misrepresentation: a false statement must have been made, the person stating it (e.g., the agent) must have known the statement to be false, and another person (e.g., a principal) must have relied on and been harmed by the misstatement.

What types of investors should take into consideration the risk of a holding period?

Any type of investor - No matter what type of investor you're working with—a fix and flip investor, a wholesaler or one looking for long-term appreciation and passive income—it is important for the investor to factor into investment risk a holding period.

Which condominium document creates the homeowners association?

Articles of incorporation - The articles of incorporation create the homeowners association, which is the corporate entity responsible for operating the developed property.

Roger is the owner/developer of the Seaside housing subdivision development. He employs Joan to help show and sell the units in his development. Joan receives a salary but no commission or extra compensation for these services. Which of the following is true?

As the owner/developer, Roger doesn't need a license, and his salaried employee, Joan, doesn't need a license, either, because she doesn't receive additional commission or compensation.-Neither the owner/developer nor his salaried employee needs a real estate license to sell, buy, lease, or exchange the property of the owner/developer, as long as the employee doesn't receive a commission or compensation for real estate services.

During periods of inflation, $10,000 today will be worth less. This is an example of what type of risk?

Buying power - Inflation affects buying power. As inflation rises, so do costs, which means that you can buy more today with that $10,000 than you could during a period of inflation in the future.

In what way could the Fed make it harder for people to obtain mortgages?

By increasing reserve requirements - By increasing reserve requirements, the Fed orders banks to keep more money on deposit. This, in turn, means that banks have less money to loan out, which increases the cost of borrowing that money.

How does a lender in the primary mortgage market earn money when acting as a loan servicer?

By preparing tax records - One way that a primary mortgage market lender can earn money is by servicing a loan and charging a fee to prepare the tax records on the property.

Cam is a broker. His licensees, Jane and John, represent two sides in a single transaction. Jane represents the seller; John represents the buyer. What relationship does Cam have to the buyer and the seller?

Cam is a dual agent to both the buyer and seller. - A dual agent represents both parties.

What's a licensee's responsibility regarding household lead hazards?

Disclosing that there's lead-based paint to a buyer when you know about it - When ingested, absorbed, or consumed, lead can cause serious health issues. Even if you represent the seller, if you know about the presence of lead, it's your responsibility to inform the buyer.

Fannie Mae recently purchased the mortgage that Tim obtained from his bank to buy his new condo. What legal document states Tim's financial obligations for the record?

Estoppel certificate - The purpose of an estoppel certificate is to verify the amount of the unpaid balance, interest rate, and the date to which interest has been paid by the borrower (Tim, in this scenario).

Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice's needs?

Exclusive agency - It's easy to confuse exclusive agency and exclusive right to sell. With exclusive agency, the seller retains the right to find a buyer and avoid paying the commission, but the seller's listing will likely receive more attention from the agent than it would with an open listing.

The powers of the FREC can be divided into three areas of duty. Can you match the description of the power to the responsibility? -Power to regulate and enforce license law

Executive

Which loan type is a fixed-rate mortgage where the monthly payments increase over time, according to a set schedule?

Growing equity - This describes a growing equity loan.

Your client submits an application to rent a condo unit. He has excellent credit and been in the same job for a long time. He uses a cane to help him with mobility. When his application is rejected, he feels it's due to his disability. He is protected under ______.

Fair Housing Amendments Act of 1988 - In 1988, the Fair Housing Amendments Act provided consumers with remedies if they became victims of discrimination in housing and also added familial status and disability to the list of protected classes.

Which act created the Office of Fair Housing and Equal Opportunity under the Department of Housing and Urban Development?

Federal Fair Housing Act of 1968 - The federal Fair Housing Act of 1968 created the Office of Fair Housing and Equal Opportunity under the Department of Housing and Urban Development. HUD enforces Title II related to public housing, housing assistance, and housing referrals.

Which act encourages fair, truthful, non-deceptive, and evidence-supported claims in advertising?

Federal Trade Commission Act - The Federal Trade Commission Act encourages fair, truthful, non-deceptive, and evidence-supported claims in advertising.

What does the Financial Institutions Reform, Recovery, and Enforcement Act require?

Federally related appraisals must be conducted by an appraiser who's either licensed or certified by the state. - FIRREA states that federally related appraisals must be conducted by an appraiser who's either licensed or certified by the state.

Daniella's rental property is barely covering her expenses. Two of her six tenants have moved out, and she has had to upgrade the building's heating and air conditioning systems. This is an example of which type of risk at work?

Financial - Daniela has less income as a result of losing two tenants, and her expenses have increased. This is an example of financial risk, which refers to the ability of an investment to cover operating expenses through operations, borrowing, and equity.

The rules of the Florida Real Estate Commission are codified in the ____________________.

Florida administrative code - Chapter 61J2 of the Florida administrative code sets forth the rules of the FREC.

What institution was formed in 1968 and took over the sale of the government loan market?

Ginnie Mae (GNMA) - Ginnie Mae (GNMA or the Government National Mortgage Association) purchases government loans on the secondary market.

Charity is living her dream. She recently purchased a nursery and greenhouse. She can't wait to re-open in the spring. The business's net worth was $200,000, but as a thriving business with a great reputation and loyal customers, it was actually valued at $275,000, which was the price Charity paid for it. As the buyer, Charity will carry the difference of $75,000 on her books as an intangible asset. What is this intangible asset called?

Goodwill - The asset is called goodwill, and represents the computed value of the company's reputation. It is the excess of the selling price over the firm's net worth.

Stanford bought a condo. He owns it as a fee simple absolute estate, so he holds all rights of ownership. Which of the following can Stanford NOT do?

Have three dogs, which violates the condo association covenants. - A fee simple absolute owner has all legal rights, but may be limited by public or private restrictions like zoning laws or HOA covenants.

Noah surrendered his apartment in top condition 15 days ago. In accordance with Florida law, when can Noah expect to receive his security deposit refund?

He should have received it already - Florida law requires that security deposits be refunded to a tenant within 15 days after the tenant has vacated the property, unless the landlord is keeping the deposit to pay for damages. The landlord may also make a claim against the deposit up to 30 days after the property has been vacated.

Prior to the ______, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing.

Housing and Community Development Act of 1974 The Housing and Community Development Act of 1974 included gender or a person's sex in the list of protected classes.

Which one of the following statements about the option period for a valid option contract is true?

If the contract doesn't state the length of the option period, a court will require the optionor to make the option period for a "reasonable time." - A valid option contract must state how long the option period is. If it doesn't, a court will require the optionor to make the option period for a "reasonable time."

A(n) ______ fraction is where the numerator is more than the denominator.

Improper - An improper fraction is one in which the numerator is more than or equal to the denominator. An example is 6/5.

When government regulation causes a land owner's property to decrease in value, it's called ______.

Inverse condemnation - A government taking can use the power of eminent domain, which requires just compensation to the property owner, or it can be in the form of inverse condemnation, when the owner must sue the government for compensation.

How does the FREC determine a penalty for a violation?

It consults the disciplinary guidelines and considers mitigating circumstances in determining the penalty. - The FREC has guidelines for issuing penalties, but may use discretion, depending on the circumstances

Which of the following is a reason mold is an environmental issue?

It damages what it grows on. - Mold damages what it grows on and can cause health problems.

Which of the following statements about the Florida property tax disclosure is NOT true?

It gives buyers a rough estimate of the property tax they'll pay in the coming year. - This disclosure doesn't provide any estimates of future property tax amounts.

Which of the following is true about the Florida Homestead Law?

It prevents families from being displaced under certain conditions. - The Florida Homestead Law prevents families from being displaced. If the homestead is titled in the name of only one spouse and that spouse dies, the surviving spouse receives a life estate to the property. Any children receive a remainder estate.

Which of these statements is true about Florida's homestead deduction?

It protects a homeowner's equity in the property. - Florida's homestead deduction was created to help homeowners protect the equity in their primary residence. It reduces the amount of property taxes owed.

What role does the Brownfields Law play in the assessment and clean-up of unused commercial/industrial sites that may contain hazardous waste?

It provides funds. - The Brownfields Law was enacted in 2002 to provide funds that help assess and clean up brownfields.

The earth's surface extending downward to the center of the earth and upward to infinity including permanently attached natural objects is called ________.

Land - This is a description of land. - HINT Natural Objects

Designated sales associates act as single agents, and a designated sales associate disclosure must list the same nine duties as a single agent notice. These are the DAD UP COLD duties.

Lara is not required to give any notice of non-representation to Trina. - When a licensee knows the buyer or seller has representation, there's no need for disclosure.

Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan's property. Stan filed a civil legal action against Emile. What will the court use to determine the actual lot line?

Legal descriptions of both properties - Recorded legal descriptions, often in conjunction with a survey or surveyor's opinion of what the legal description indicates, may be used to determine ownership boundaries.

When pitching the benefits of full representation to a potential client, you can list which of these duties as exclusive to a single agent relationship?

Loyalty - Loyalty is one of the fiduciary duties owed by single agents, along with full confidentiality, obedience, and full disclosure.

Owners of agricultural land must classify their land for protection by ____________ of each year.

March 1 - Owners of agricultural land must classify their land for protection by March 1 of each year.

Which of the following is a type of zoning action?

Moratorium - Some of these describe zoning types, but only one describes a zoning action, and that is a moratorium.

How many duties are owed by a designated sales associate?

Nine - Designated sales associates act as single agents, and a designated sales associate disclosure must list the same nine duties as a single agent notice. These are the DAD UP COLD duties.

How long can a license remain in involuntary inactive status?

No more than two years - Licensees have two years in which to complete the education requirements and renew a license in involuntary inactive status. If they wait longer than two years, they will have to re-apply for a license, retake the pre-licensing education, and pass the license exam again.

Which of the following is true about Florida homesteads?

Non-governmental creditors cannot pursue liens against these properties. - Non-governmental creditors cannot pursue liens against Florida homestead properties to force the sale of the home.

Sheila and Vickie are sisters who enter into a contract to buy a vacation property. The sisters get into a dispute, and Vickie no longer wants any part of the deal. However, Sheila talks her younger brother Joe into replacing Vickie on the contract. Vickie agrees to the substitution. This is an example of ________.

Novation - Novation is the substitution of one of the parties to an existing contract, which releases the original party from all liability and creates a new contract.

Flynt has a loan for a shopping center and is required to pay not only his mortgage payment but a percentage of the income he earns from the shops. What kind of a mortgage is this?

Participation - A participation mortgage allows the lender to participate in a project by investing funds and realizing a return.

What type of income is received through activities not directly related to active participation in a business or earnings from wages, such as rental income?

Passive - Income received through activities not directly related to active participation in a business or earnings from wages, such as rental income, is passive income.

What might the government do if property owners fail to pay taxes on their property?

Place a lien on the property. - Unpaid taxes become a lien on real estate.

A new development is going up just outside city limits where the population is expected to grow significantly in the next decade. The development will consist of commercial properties in one quadrant near a main road. The other areas are designated residential and will include single-family residences and multi-family townhomes. A small number of the single-family homes will border a golf course that is at the center of the development. What type of zoning is this an example of?

Planned unit development - Planned unit developments are planned and built as a single unit, with the type and location of uses and buildings fixed throughout the entire project.

Which of the following is income that comes from investments, which includes capital gains, interest, and dividends?

Portfolio - This is portfolio income, as classified by the IRS.

Which of these properties are exempt from the FIRREA federal appraisal guidelines?

Properties valued at $400,000 or less - Properties valued at $400,000 or less are exempt from federal appraisal requirements.

Which of the following accurately describes the Division of Real Estate?

Provides administrative services for Florida Real Estate Commission. - The DRE is responsible for administrative services and ministerial duties for the FREC.

The powers of the FREC can be divided into three areas of duty. Can you match the description of the power to the responsibility? -Power to grant or deny license applications, determine violations of license law, and administer penalties

Quasi-judicial

The powers of the FREC can be divided into three areas of duty. Can you match the description of the power to the responsibility? -Power to enact and revise administrative rules

Quasi-legislative

Chapter 475 of the Florida statutes, called the ______, sets forth the law regarding real estate brokers, sales associates, and real estate schools.

Real Estate Professional Practice Act - The Real Estate Professional Practice Act was created by the Florida legislature to establish the legal rights and responsibilities of real estate licensees.

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?

Recording provides constructive notice that he owns the property. - Ownership officially transfers when the grantor delivers the deed to the grantee, but recording provides constructive notice that Conrad owns the property, thereby permitting anyone who does a public records search to see the ownership information.

What discriminatory lending practice by lenders resulted in the destruction of whole neighborhoods, with perfectly good housing left abandoned?

Redlining - Redlining areas based on protected class status of the area resulted in the destruction of whole neighborhoods and abandoned housing.

What's the term for a lender refusing to lend in a specific area, often based on the area's minority make-up?

Redlining - When lenders determine where they will lend based on a neighborhood's racial or other protected class status, it's redlining, and it's illegal.

Bridget has an investment portfolio which includes an equity REIT. Which of these is most likely to be part of the REIT's investment?

Retail shopping centers - Equity REITs invest in income-producing property such as a retail shopping center. Undeveloped land isn't likely to produce income, and equity REITs don't invest in mortgage debt. That's the role of mortgage REITs.

Teena has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have?

Right-to-use - Fee simple ownership of a timeshare (aka timeshare estate) unit means that the owner may share tenancy in common with other timeshare owners or may have an interval ownership. A right-to- use time share is a lease agreement, not an ownership interest.

A sales associate or broker associate may hold what position in a corporation?

Shareholder - Sales associates and broker associates may only hold a position of shareholder within a corporation, other positions of ownership and involvement are prohibited and could result in citations or fees being assessed.

If a negotiable instrument is transferrable, it must be ___________.

Signed - To be transferrable, a negotiable instrument must be in writing, be payable on demand or at a definite time, contain a promise or order to pay, state a specific or fixed sum of money, and be signed.

Which of these authorized brokerage relationships includes fiduciary duties?

Single agency - Only a single agent may act as fiduciary. Dual agency is illegal in Florida.

A planning commission has final authority over ?

Site plan - The planning commission has final authority over three things: subdivision plat approval, site plans, and sign control.

With which type of government power can a lien be placed on a property, giving the government a claim to the property?

Taxation - Taxation is a government power that, if unpaid, allows the government to place a lien on the property.

Manny has a client who wants to purchase a commercial building. Manny doesn't have any experience negotiating commercial purchases. Which action should Manny take to demonstrate his good faith and most ethical behavior toward his client?

Tell the client about his inexperience, but say that he'd like to continue the relationship and will consult with a professional commercial broker throughout the transaction. - Remember, good faith is about putting the client's interests ahead of yours. The client would want to know that his agent is inexperienced.

______ is the form of ownership used by married couples in certain states. It includes automatic survivorship rights.

Tenancy by the entirety - This is tenancy by the entirety, where each has an undivided interest in the entire property. If one dies, the other owns the entire property. If they divorce, their ownership automatically becomes a tenancy in common.

Deborah and her mother, Sarah, own a townhouse together. Sarah owns 70% of the house and Deborah owns 30%. What type of ownership is this?

Tenancy in common - They are tenants in common. You can use the process of elimination to determine the answer here. The key things are that they are not married (required by tenancy by entirety) and they do not have equal percentages of ownership (required by joint tenancy). Tenancy at will is not a type of ownership, it is a leasehold estate.

Luther is analyzing an investment property. During his analysis, he looks at environmental sensitivity, political climate, the potential for a development moratorium, economic downturns, etc. What is Luther demonstrating?

That risks involved with real estate investments need to be analyzed -Luther is demonstrating that the risks involved with real estate investments need to be analyzed.

Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean?

The HOA lien takes priority over all other liens except a property tax lien. - Super lien status means that the lien is granted higher priority than all other liens, including mortgages, deeds of trust, or property taxes.

A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true?

The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms. - The APR can be included in an ad without requiring disclosure of all credit terms. APR figures allow consumers to make an informed comparison between loans, which is TILA's goal.

In title theory states, which of the following is true?

The borrower doesn't hold the legal title to the property until the loan is paid in full. - In title theory states, the borrower doesn't hold the title until the loan is paid in full. Either the lender or a third party holds the title.

Which of the following actions occurs prior to closing?

The buyer obtains a binder for insurance coverage on the new home. - A buyer should obtain homeowners insurance before closing. That way, the property is protected the moment ownership (title) changes hands.

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note?

The lender holds the mortgage and the note. - The note and mortgage are the lender's leverage to foreclose in the event of default.

Meredith died, leaving behind a will. Although her instructions to devise her property to her daughter were explicit, her husband inherited. Why might this be?

The operation of law - If a property is held in joint tenancy with right of survivorship, for instance, the share in the property belonging to the deceased can't be devised.

What's the next step in the adoption process for a comprehensive plan once the background studies have been performed?

The plan is reviewed at a public hearing by the planning commission. - After background studies are completed, the planning commission holds a public hearing to review the plan to solicit input and formulate goals for the comprehensive plan.

Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter's relationship to the sellers, if he doesn't represent them?

The sellers are Peter's customers. - The sellers are Peter's customers; he doesn't owe fiduciary duties to them, but he is required to treat them with fairness and honesty.

What does the parol evidence rule say about contracts?

The terms agreed to in a written contract are the only terms relating to that contract. - The parol evidence rules states that only in limited cases may extraneous evidence be presented to dispute the terms of a signed, written contract.

Where are mortgages recorded?

They're recorded at the recorder's office in the county where the property is located. - Mortgages are recorded in the recorder's office of the county where the property is located.

Charlie represents Sue, a buyer. Charlie is being paid by Claude, the seller, through his brokerage. What's true about this situation?

This doesn't change the agency relationships. - You can be paid by someone and not be that person's agent. Compensation doesn't determine agency—the agency relationship agreement does.

How many duties are owed in a "no-brokerage" relationship in Florida?

Three - Three duties, to deal honestly and fairly, to disclose all known material facts, and to account for all funds, are owed in all brokerage relationships—even the "no-brokerage" relationship.

What is the correct calculation to figure out a commission rate?

Total commission ÷ sales price - To calculate a commission percentage rate, you must divide the total commission amount by the sales price.

When the planning board gets together, Carl focuses on commercial aspects, Renee focuses on residential areas, and Arthur focuses on agricultural spaces—all without any insight from one another. What type of planning is this?

Traditional planning - Under traditional planning, specialists with different areas of expertise worked separately and focused on designing "their" areas. This created pockets of developed space and isolated space.

It's impossible to generalize the impact events in other areas have on local real estate values. Which characteristic of the real estate market does this refer to?

Uniqueness - This refers to uniqueness. For example, two identical houses on side-by-side lots have different values.

The __________ of real estate markets makes it impossible to generalize the impact events in other areas will have on real estate values.

Uniqueness - This refers to uniqueness. Two identical houses on side-by-side lots have different values.

Which of the following isn't an element of intentional misrepresentation?

When it's witnessed or validated by multiple people. - The claim doesn't require validation nor does it need to be witnessed by multiple people.

When does the listing agreement between you and a seller client need to be in writing to be enforceable?

When the term of the listing agreement exceeds one year - A listing agreement with a term that exceeds one year falls into the category of contract types that are covered by the statute of frauds and must be in writing to be enforceable.

When must a branch office must be registered with the DBPR?

When the use of the office and the activities performed there are for more than just emergency shelter for inclement weather. - Whenever an office is used as a regular location in which to conduct brokerage activities, it must be registered.

What legal document must be delivered to the sheriff before a tenant may be forcibly removed from a rental?

Writ of possession - When a tenant refuses to vacate the premises after being lawfully evicted, the judge may issue a writ of possession, which the landlord must then deliver to the sheriff.

Kris made an offer on Lincoln's townhouse. However, Kris offered no earnest money. If Lincoln accepted her offer, would it be binding?

Yes, because the offer to buy is the consideration. - Earnest money isn't required to have a binding sales contract (although it's usually preferred by the seller). If no earnest money is provided, the prospective buyer's only consideration is the promise to pay the purchase price.

The city of River Heights is experiencing a shortage of skilled workers in the construction trades. Is this likely to affect the real estate market, and if so, how?

Yes, this would impact the supply of homes on the market, potentially creating a seller's market. - The availability of skilled labor to build homes is a factor that will affect the supply of homes on the market. Low supply can potentially create a seller's market.