Questions I've Gotten Wrong on Quizzes and Tests
A building's income is projected to have an annual net operating income of $10,500 with expenses averaging $2,500. Assuming a capitalization rate of 9%, what is the present cash value?
$116,667
The listing and selling brokers agree to equally share a 7% commission on a $95,900 sale. The listing broker gives the listing licensee 50% of the firm's commission and the selling broker gives the selling licensee 65% of that firm's commission.How much does the selling licensee earn fromthe sale?
$2,181.73
What is the maximum loan for which a borrower can qualify if his annual income is $84,000, his monthly recurring debt is $746, his estimated monthly taxes and insurance escrow amount is $285, his loan factor is 6.32, and the qualifying rations are 28 and 36?
$235,601
if the GRM in a neighborhood is $125 and the monthly rent in a duplex is $1,000 per unit, then the approximate value of the property is
$250,000
If a residential property has a net operating income of $49,200 per year and an appraiser uses a capitalization rate of 12%, the estimated property valu
$410,000
A farmer owns the W 1/2 of the NW¼ of the NW 1/4 of a section. The adjoining property can be purchased for $300 per acre. Owning all of the NW 1/4 of the section would cost the farmer.
$42,000
An investor projects that a potential investment property will generate net operating income of $18,000 and debt service of $15,000. He wants to make a down payment of $30,000. If his projections are correct, his cash-on-cash return rate should be
10%
An investor wishes to purchase a $250,000 warehouse with 20% down. She expects that the net operating income will be $25,000 and debt service will be $18,000. What is the anticipated cash-on-cash return rate?
14%
An investor wishes to purchase a $250,000 warehouse with 20% down. She expects that the net operating income will be $25,000 and debt service will be $18,000. What is the anticipated cash-on-cash return rate?
14% $250,000 SP x 20% DP = $50,000 equity; $25,000 NOI - 18,000 debt service = $7,000 CTO ÷ $50,000 equity = 0.14 = 14%
If a property's annual net income is $24,000 and it is valued at $300,000, what is the capitalization rate?
8%
Which of the following statements about the North Carolina Timeshare Act are FALSE?
A purchaser of a new timeshare ownership must be given a 10-day rescission period
Which of the following liens is NOT required to be recorded in order to be valid?
Ad valorem tax lien
The federal agency that is tasked with the oversight of the public welfare in connection with lending practices is the
Consumer Financial Protection Bureau
Which of the following is TRUE regarding debt service?
Debt service is not considered an operating expense, Debt service includes principal and interest, Debt service is not considered in computing net operating income
In this type of listing, there is one exclusive broker, but the seller retains the right to personally sell the property without financial obligation to the broker.
Exclusive-agency listing
A listing contract contains a clause that gives the broker the right to collect a commission after the listing contract terminates if the owner sells the property to someone the broker introduced to the property. this is what type of clause?
Extender
Under the NCAR/NCBA Offer to Purchase and Contract 2-T, which of the following BEST describes the due diligence fee?
Legal consideration
Which of the following is TRUE about an installment land contract?
The buyer is given immediate possession and use of the property
Which of the following BEST describes a contract that is voidable
The contract that may be valid
Which statement is TRUE regarding property description?
The use of the street address with a reference to a recorded plat description is a very acceptable legal description used in listing a residential property located in a subdivision
Under the North Carolina Conner Act, all the following documents must be recorded to be valid against third parties EXCEPT
a lease for three years in duration
If the broker-in-charge (BIC) is to act as one of the designated agents on a North Carolina in-house transaction, which of the following may be appointed as a designated agent for the other party to the transaction?
a licensed broker within the firm who has no prior confidential knowledge of the party that the BIC will represent
Whether subdivision streets are publicly or privately owned and maintained is
a material fact that must always be disclosed by a real estate broker
All of the following statements about short sales are true EXCEPT
a sales contract has not been created until the lienholder agrees to the short sale contract terms
Zoning ordinances generally regulate such things as the
a. placement of buildings on property b. bulk and density of buildings c. height of buildings
An appraiser needs certain financial figures in order to determine value by the income approach. Which of the following numbers is NOT required for the income approach to value?
a. annual net operating income b. capitalization rate C. ACCRUED DEPRECIATION d. annual gross income
The clause in a mortgage loan instrument that would prevent the assumption of the mortgage loan by a new purchaser is
alienation cause
Which of the following statements is TRUE about the North Carolina Residential Property Act?
all agents in the transaction should facilitate the timely delivery of the property disclosure report to the buyer
The state-mandated oil and gas rights disclosure language is required in sales contracts for all of the following EXCEPT
an office building
A listing contract in which the broker's commission is contingent on the broker being able to produce an acceptable buyer before the property is sold by the owner or another broker is called
an open listing
Aesthetic zoning would be an example o
an overlay district
The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that
any and all of the seller's interests in the property belong to the buyer
The successful property manager does all of the following EXCEPT
appeases the tenants by repairing their equipment
When considering an investment in real estate, the prospective investor should consider all of the following EXCEPT
assessed valuation of the property
According to North Carolina Real Estate Commission rules, a valid sales contract can contain all the following EXCEPT
brokerage compensation split
A prospective buyer makes a written purchase offer through a buyer's agent at ABC Realty. The seller accepts the offer as written. Seller communicates to a listing agent at XYZ Realty that the offer was signed. At this point in time, the
buyer can still withdraw the offer
Which of the following statements is TRUE regarding the Interstate Land Sales Full Disclosure Act?
buyers of property subject to the Act must receive a property report prior to creation of a sales contract
In North Carolina, a deficiency judgment
can be renewed by the creditor
A real estate sales contract becomes valid when
communication of acceptance is given to the offeror or the offeror's agent
A buyer purchases a fee simple estate and has an undivided interest in common elements associated with the property that includes all the land. What form of ownership interest does the buyer hold?
condominium
The tenant leases a heated apartment, but the landlord fails to provide heat because of a defective central heating plant. After numerous written requests for the landlord to fix the heating problem, the tenant vacates the premises and refuses to pay any more rent. This is an example of
constructive eviction
The buyer in an installment land contract is typically NOT responsible for paying during the contact period for
contract recording fees
A land contract provides for the
conveyance of legal title at a future date
A decedent left a will giving a neighbor the right to use a well on the decedent's land as long as the neighbor was alive. The neighbor's interest in the property is properly called a(n)
easement in gross
A homeowner tells her neighbor that he can park his camper n the corner of her backyard. No rent is charged for the use of her yard . This is an example of an
easement in gross
The number of years a property is expected to remain useful for its original purpose is called its
economic life
A tenant's apartment lease has expired. She and her landlord have agreed that she may remain on the premises until a sale of the building is finalized or until the tenant locates another suitable rental, whichever occurs first. The tenant will continue to pay her normal monthly rent. She and the landlord made a commitment to inform each other two weeks prior to ending this agreement. The tenancy described is
estate at will
Debts that are incurred by an individual and become liens against any real or personal property owned by that person are
general liens
Deed restrictions are a means by which
grantors control the future use of ownership
A listing agent has an obligation to disclose to the seller
if the buyer intends to resell the property quickly for a profit
The amount of compensation due to a salesperson licensee from the brokerage firm is determined by the
in-house employment contract
The use of privately owned real property may be regulated and restricted by
individuals, local government, state
Which of the following pairs of terms is considered MOST synonymous
interim financing and construction loan
The assumption in calculating the cap rate is that
investors will pay cash for the property
All of the following are true about historic preservation zoning EXCEPT
it is available only on residences of historical value
A property owner conveys the ownership of his apartment building to a nursing home, anticipating that the rental income will help pay for his father's care at the home. When his father dies, the original owner will recapture the ownership of the apartment building. This is an example of a
life estate pur autre vie
Mortgage lenders want assurance that future real estate taxes will be paid. The MOST common way to do this is to require the borrower to
make installment payments into an escrow account
A North Carolina lease that will terminate within one year of its inception
may be valid if oral
The system of legal description that defines a parcel of land by its perimeter is the
metes-and-bounds system
Which of the following is a voluntary lien?
mortgage lien
In North Carolina, oral buyer agency
must be non-exclusive and have no expiration date
The subject property is a two-story home with three bedrooms, three baths, a family room, a dining room and an attached two-car garage. Which of the following would be a legitimate comparable sale? I. two story home with 3 bedrooms and 2.5 baths in the same neighborhood that sold 18 months ago II. one story home in a different neighborhood with 3 bedrooms and 2 baths, a detached one car garage and no family or dining room
neither I nor II
A lessee who pays some or all of the lessor's property expenses has a
net lease
The formula for before-tax cash flow is
net operating income - debt service
An owner lists a property for sale with the broker. A different broker finds an acceptable buyer for the property. The listing broker was not entitled to receive a commission from the sale. The type of listing contract was most probably an
open listing agreement
The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the
open-end mortgage
Aesthetic zoning would be an example of
overlay district
The provision in a listing agreement that may obligate the seller to pay the listing firm a commission after the expiration date of the listing is the
override clause
A written real estate contract is presumed to be the complete agreement of the parties to a contract because of the
parole evidence rule
Regulation Z applies to
personal credit transactions less than $25,000
The formula for net operating income is
potential gross income - vacancy and collection losses - operating expenses
Under an exclusive agency listing, the listing broker would be entitled to a commission in all the following situations EXCEPT
property is listed in a multiple listing service
A trespasser built a log cabin in a remote area of a national park and occupied the structure for more than 25 years. That person will never be able to claim the property under adverse possession statuses because the
property was not privately owned
Fannie Mae
purchases FHA loans in the secondary mortgage market
Fixed expenses that the property manager should consider when developing the operating budget include all the following EXCEPT
repairs
The Equal Credit Opportunity Act
requires that a rejected credit applicant be told why credit was denied
A conventional option contract
requires the optionee to complete the purchase within the specified time period, time being of the essence
According to the North Carolina Real Estate Commission's Residential Square Footage Guidelines,
residential square footage is measured externally
A buyer agreed to purchase a property for $230,000. The buyer gave a $7,000 earnest money deposit to the listing broker. The seller was unable to transfer clear title, so the buyer subsequently demanded the return of his earnest money. The broker should
return the entire amount to the buyer only if the seller does not dispute the return
The purpose of the Real Estate Settlement Procedures Act (RESPA) is to
see that borrowers know all of their settlement costs
As an agent for the seller, a real estate broker can
solicit an offer to purchase the property from a prospective buyer
Co-owners of a fee simple interest in a small office building are neither related to nor a creditor to each other. One owner dies intestate. The surviving owner would become the sole owner of the property under which of the following rights?
survivorship
A brother and a sister can NOT concurrently own real estate in North Carolina as
tenants by entireties
A property owner signed a 90-day listing agreement with a broker. The owner was killed in an accident before the listing expired. Now the listing is
terminated automatically upon the death of a principal
A North Carolina broker verbally agrees to represent a prospective buyer even though the buyer declined to sign a buyer agency agreement. The broker neglected to revisit the agency issue before showing the buyer a suitable property. Therefore, while showing property, the agent has a fiduciary relationship to
the buyer
The listing broker receives an earnest money deposit with a written offer to purchase that includes a 10-day acceptance clause. On the fifth day, before the offer is accepted, the buyer withdraws the offer and demands the return of the earnest money deposit. In this situation,
the buyer has the right to revoke the offer at any time until it is accepted and is entitled to recover the earnest money
Which of the following statements is TRUE of the income approach to value?
the capitalization rate must be estimated
Which of the following statements is TRUE regarding North Carolina subdivisions
the final subdivision plat must be recorded before closing an on any lot
A deed of trust differs from a mortgage in all of the following ways EXCEPT
the obligation of the borrower to repay the funds
When a tenant sublets all or any part of the premises rented under a written lease
the original lease is unaffected unless it contains a provision that prohibits such subletting
Under the North Carolina Residential Property Disclosure Act,
the property report information must be kept current
Which of the following statements is TRUE about the North Carolina Working With Real Estate Agents brochure?
the real estate agent must review the agency options in the brochure with the consumer
The best assurance of good title that a real estate purchaser can obtain is a
title insurance policy
Which of the following BEST describes the purpose of a building permit?
to provide evidence of compliance with municipal regulations
The primary purpose of a deed is to
transfer title rights
Effective gross income equals potential gross income minus
vacancy and collection losses
If a real estate licensee is an independent contractor affilitade with a real estate brokerage firm, the licensee is solely responsible for all of the following EXCEPT
violations of state licensing law
All of the following statements are true regarding zoning EXCEPT
zoning will prevail over any conflict with restrictive covenants
