Real Estate Exam

An income producing property sells for $1,650,000 with a net operating income before depreciation of $127,875. Calculate the overall capitalization rate for this property. a. 7.75% b. 8.5% c. 22.5% d. 18.75%

a cap rate = net operating income / value x 100

Salesperson Lee of ABC Realty Inc. has listed a property at a rate of 5% commission. Salesperson Lee is compensated based on a 60/40 commission split with the brokerage. Salesperson Martin of XYZ Real Estate Ltd. sells the property. All salespeople within XYZ Real Estate Ltd. have a commission split of 55/45 with the brokerage (Note: Brokerage retains the smaller portion). The commission distribution between listing and selling brokerages is 50/50. The property sells for $176,000. The amount of commission to each party is:

$176,000 x 5% = $8,800 total commission. The split between the brokerages is 50/50. $8,800 x 50% = $4,400. Lee (listing salesperson) is on a 60/40 split with ABC Realty Inc. $4,400 x 60% = $2,640. The other 40% ($1,760) goes to ABC Realty Inc. Martin is on a 55/45 split with XYZ Real Estate Ltd. $4,400 x 55% = $2,420. The other 45% ($1,980) goes to XYZ Real Estate Ltd.

Builder Anderson is attempting to estimate the cost of pouring concrete driveways for three new houses under construction. Each driveway will measure 24 feet wide, 40 feet long and 3 inches thick. If a contractor quotes $167.50 per cubic yard (including forms and finishing costs), how much will Anderson have to pay the contractor (round to the nearest $100)?

$4,500 (rounded) 24 x 40 x .25 = 240 (cubic feet) ÷ 27 = 8.89 (cubic yards) 8.89 x 3 (houses) = 26.67 cubic yards x $167.50 = $4,467.67 (rounded to $4,500). The correct answer is: $4,500.00

Broker/Owner Brown's real estate brokerage completed 240 transactions last year of which Salesperson Martin was involved in 32. What percentage involvement does that represent (round to two decimal points)?

13.33

Salesperson Garcia of ABC Realty Inc. is calculating commission based on a 6% rate and a sale price of $129,000 for a vacant lot. Her portion will be 50% of that amount. What is Garcia's commission (round to the nearest dollar)?

3,870.00

A buyer has a gross income of $65,000 per annum and is considering the purchase of a property with annual taxes of $2,200. The buyer is also paying a car loan of $595 per month. If the lending institution utilizes a total debt service ratio of 38%, the buyer would qualify for a maximum blended monthly mortgage payment including principal and interest of: a. $1,082.57. b .$1,280.00. c. $1,393.67. d. $967.83.

PIT+L = Income x TDS. $65,000 x 38% (or .38) = $24,700. $24,700 is the maximum amount that the buyer can pay per year for principal, interest, taxes and loans. This question calls for just the monthly principal and interest amount so the taxes and loans must be deducted. $24,700 - ($595 x 12) - $2,200 = $24,700 - $7,140 - $2,200 = $15,360 annual principal and interest payments ÷ 12 = $1,280 monthly.

A municipality has a total tax base of $65,700,000 and a budget of $885,800. A property within that municipality has an assessed value of $165,000. The annual property tax for this property is (approximately): a. $1,650. b. $1,224. c. $2,225. d. $2,461.

This question requires two calculations. First determine the tax rate. The formula is: Tax Rate = Budget ÷ Total Assessment. $885,800 ÷ $65,700,000 = 0.013482496. Next, determine the property tax. The formula is: Property Tax = Assessed Value x Tax Rate. $165,000 x 0.013482496 = $2,224.61 rounded to $2,225.

A buyer purchases a home and assumes an existing first mortgage with an outstanding principal balance of $137,850 at an interest rate of 9.5%. He also arranges a new second mortgage for $31,500 at an interest rate of 11.25%. Using the mortgage averaging formula, what is the average overall interest rate on the total debt? (Both mortgages have identical one year terms and the same amortization.) a. 9.83% b. 11.08% c. 7.73% d. 9.75%

a

Broker/owner Davis of XYZ Real Estate Ltd. is weighing the financial merits of remaining in the existing office premises that consists of 3,000 square feet. The current rent per square foot per year is $9.22. Last year, the same premises rented at $8.95. The landlord has informed broker/owner Davis that next year's rent will be $9.40 per square foot per year. What are the respective rent increases from last year to this year, from this year to next year (rounded to the nearest percent) and the amount of rent payable each month during the next year if broker/owner Davis elects to remain in these premises? a. 3%, 2%, $2,350. b. 3%, 2%, $2,305. c. 3%, 2%, $2,238. d. 3%, 5%, $2,468.

a

Economists tend to regard the real estate market in terms of supply and demand forces. However, this market, as with many others that make up the Canadian economy, is not a perfect equilibrium between such forces. Which of the following best describes a lack of balance between supply and demand forces? a. A dramatic increase in price, sometimes described as a "market bubble", may be immediately followed by a rapid decline in price. b. A local plant closes and real estate values decline. c. Mortgage interest rates decline and the demand for real estate increases. d. Prices are stable and a market equilibrium exists.

a

For Sale signs are generally considered to be one of the very best forms of advertising. However, it has been pointed out that there can be negative factors related to the use of For Sale signs. Which of the following would be an example of this? a. Sometimes the property does not sell quickly and the sign is visible for many months. b. For Sale signs are relatively expensive compared to other forms of advertising. c. Buyers often select their choice of neighbourhood first and then drive around looking for properties for sale. d. Neighbours may know of someone who is thinking of moving into the neighbourhood.

a

In a buyer's market, you would expect to see: a. supply exceeding demand. b. properties selling for more than the listed price. c. properties selling quickly when listed. d. prices based on objective value.

a

In order to be successful in real estate trading, the salesperson: A. Needs to understand the needs and wants of the clients. B. Must make sure that clients select only the houses made by a specific builder. C. Should be proficient in all information related to residential as well as commercial structures. D. Must make sure that any information that harms personal interests of the client is not disclosed.

a

1. Builders usually hire a number of salespersons for marketing activities. Which of the following situations would permit a salesperson to sell new homes without being registered under REBBA 2002? A. When the salesperson is working full time with a registered brokerage. B. When the salesperson works as full time salaried employee and only sells new homes of that builder. C. When the salesperson works either full time or part time as an employee and gets a fixed commission for each sale. D. When the salesperson works as full time independent contractor and gets commission for each sale.

b

Real estate salespersons and brokerages in Ontario must operate under various requirements in the conduct of their business. Which of the following is a correct statement regarding such requirements? a. The Real Estate and Business Brokers Act, 2002, is the legislation that regulates the real estate brokerage business in Ontario. b. According to the Real Estate and Business Brokers Act, 2002, a real estate salesperson can own and operate a sole proprietor brokerage business. c. According to the Real Estate and Business Brokers Act, 2002, a salesperson is legally defined as an agent. d. For a partnership to be registered as a real estate brokerage, the partnership must create a corporation.

a

Salesperson Warden of XYZ Real Estate Ltd. is preparing to make a presentation to Mr. and Mrs. Petrie regarding market trends. In addition to other statistics, Warden has compiled sales data concerning twelve properties that have sold recently and are roughly comparable to the subject property. As part of the presentation, Warden is interested in knowing both the median and average price from these sales. Which of the following is the correct answer? $229,000. 219,000. 224,500. 222,860. 219,500. 223,840. $216,000. 218,200. 219,600. 225,500. 227,600. 219,000. a. Average sale price is $222,050, median is $221,230. b. Average sale price is $222,327, median is $222,050. c. Average sale price is $222,327, median is $222,860. d. Average sale price is $222,050, median is $222,860.

a

Smith owns a home at 13 Elm Street with lot dimensions of 80 feet frontage by 264 feet of depth. He notices that the home next door went up for sale and has a lot with similar dimensions. A real estate salesperson has contacted him and explained that according to local zoning requirements, lots in this area with a minimum of 100 feet frontage qualify as a site for a condominium or apartment building. He also explains this means that the two lots together would have a value of almost a million dollars as a development site, while each of the properties separately would be worth approximately $150,000. The salesperson suggests that Smith buy the property next door, which is listed at $154,500, and then offer the properties for sale as a condominium site. Which principle of value is this proposal based on? a. The principle of highest and best use. b. The principle of consistent use. c. The principle of substitution. d. The principle of conformity.

a

The Real Estate Council of Ontario is a regulatory organization involved in the enforcement of the law related to the real estate brokerage business. Such activities would include: a. providing applicable sanctions against RECO members. b. enforcing the REALTOR® trademark. c. maintaining the MLS® system in Ontario. d. regulating the activities of real estate boards.

a

The closing date of a transaction is March 29th. The property is oil heated and has a 1,000 litre oil tank. On the day prior to closing, the tank is filled. The amount required to fill the tank is 378 litres at a cost of $0.88 per litre. Who receives credit on the statement of adjustments and in what amount? (February has 28 days.) a. The Seller gets credit for $880.00. b. The buyer gets credit for $209.75. c. The seller gets credit for $332.64. d. The buyer gets credit for $212.16.

a

When a written appraisal report is completed, the estimate of value reported is stated to be as of a specific date, for example "It is my estimate that the subject property has a market value as of June 15, 2008, of Two Hundred Thousand dollars ($200,000)". Which principle of value is the main reason for having such a date? a. The principle of change. b. The principle of progression. c. The principle of balance. d. The principle of consistent use.

a

Which of the following is a correct statement regarding statistical analysis of economy? A. When consumer confidence increases, it is an indication that the demand will also increase. B. A decline in purchasing power of dollar is an indication of decline in consumer prices. C. Consumer Price Index rarely helps analysts in study and identification of the changes in economy. D. The data about resource markets is essentially comprised of labour, finances and consumers.

a

Which of the following is a requirement for a real estate brokerage to be registered in Ontario? a. The brokerage, whether a sole proprietor, partnership or corporation, must have a designated "broker of record". b. All shareholders of a brokerage corporation must be registered brokers. c. For a partnership to be registered as a brokerage, the partners must create and register a corporation. d. A sole proprietor must disclose all "interested persons" who hold shares in the company.

a

Which of the following is an example of characteristics of real estate market? A. Real estate market is local because properties have fixed location and values are impacted by local economic conditions. B. The real estate market reacts very quickly in response to deteriorating overall economic conditions. C. All data about real estate transactions is available because real estate boards post it on the internet. D. Real estate business cycles are similar to other business cycles because both have similar peaks and valleys.

a

Which of the following statements correctly describes the role of a property manager? A. A property manager performs administrative activities on behalf of the owners. B. A property manager is essentially a building superintendent. C. Since the function of the property manager is to keep the property leased and collect rental income, he is essentially a leasing agent. D. A property manager helps the owners in all financial matters including evaluation for the purpose of sale.

a

Which of the following statements is correct regarding registration under REBBA 2002 and the role of organized real estate? A. It is possible to be registered under REBBA 2002 and not be a member of the local Real Estate Board. B. Registration with RECO permits registrants to trade in real estate anywhere Canada. C. The MLS® and the REALTOR® trademarks are owned, promoted and protected by the Real Estate Council of Ontario. D. The CREA® Code of Ethics and Standards of Business Practice is a provincial statue mandatory for all registrants

a

With respect to RECO membership and the role of Organized Real Estate, select the correct statement from the choices provided. a. It is possible to be a RECO registrant and not be a member of the local Real Estate Board. b. RECO owns and protects the MLS® and REALTOR® trademarks. c. Membership in RECO permits registrants to trade in real estate in all provinces in Canada. d. The CREA Code of Ethics and Standards of Business Practice is a Province of Ontario statute legislated by the federal government.

a

A buyer is considering purchasing a house for $265,000 and he has the following costs which must be paid on closing: $3,770 for land transfer tax and legal fees $825 for adjustments on closing $1,400 for moving expenses $4,200 for major purchases If the buyer was assuming existing financing of $187,500, what liquid assets (money) will the buyer require? a. $275,195 b. $87,695 c. $254,805 d. $77,500

b

Builder Conrad is attempting to estimate the cost of pouring concrete driveways for three new houses under construction. Each driveway measures 24 feet wide, 35 feet long and 3 inches thick. If a contractor quotes $91.25 per cubic yard (including forms and finishing costs), how much will Conrad have to pay the contractor in total for all three driveways (rounded to the nearest dollar)? (1 cubic yard = 27 cubic feet) a. $2,784. b. $2,129. c. $1,879. d. $710.

b

The rules and regulations of the Multiple Listing Service® are: A. Established by brokerages to comply with REBBA 2002. B. Enacted and enforced by the local real estate board. C. Enacted and enforced by Ontario Real Estate Association. D. Mandated by RECO in compliance with REBBA 2002.

b

Which of the following statements best describes how Maslow's Hierarchy explains the behaviour of real estate buyers? a. Maslow's Hierarchy includes a category for Shelter and Safety and that is the only category that explains the behaviour of real estate buyers. b. All of the categories in Maslow's hierarchy can help to explain the actions of real estate buyers in the market. c. Maslow's Hierarchy has categories for Ego and Self-actualization and these categories have no bearing on the behaviour of real estate buyers. d. These types of psychological theories are not important in the marketing of real estate.

b

Which of the following statements describes one of the actions taken by RECO to fulfill RECO's mandate? a. RECO establishes standard commission rates to be charged by all registrants in Ontario. b. RECO maintains the Registrar's Complaints and Inquiries program to address concerns and complaints from consumers. c. RECO establishes the local real estate board rules for the showing of properties and the presentation of offers. d. RECO investigated complaints by real estate registrants concerning unscrupulous buyers and sellers.

b

Which of the following statements is correct about real estate values? A. Value in Use is same as Objective Value, but it is used for commercial properties. B. Subjective Value is based on perception of future benefits of ownership. C. Market Price is an estimate of value based on buyer's interest in a specific property. D. Market Value is an established value based on some specific improvements in the property.

b

Which of the following statements is correct about typical real estate commission? A. Commission is paid by the seller to the listing brokerage and then it is forwarded to lawyers for distribution. B. Commission split refers to division of commission between a brokerage and its salesperson. C. Commission allocation is decided by the seller's lawyer based on sale price. D. Gross commission to a brokerage is also known as the total commission paid by the seller.

b

Which of the following statements is correct as it relates to Privacy Legislation in Canada? a. Individuals do not have the right to access or challenge information stored by an organization. b. Personal information can only be used specifically for the intended purpose for which it was collected. c. For an employee of an organization, personal information includes the job title, business address and telephone number of the employee. d. Once an individual has given consent for the collection of personal information, the information can be used for any purpose.

b

Which of the following statements is true with respect to the importance of marketing by real estate brokerages? a. The process of creating a marketing plan begins after a property is listed. b. The marketing of both products and services is important for real estate brokerages. c. The only form of marketing plan used in real estate brokerage is a listing presentation. d. Marketing plans are not relevant when dealing with the seller since properties are marketed to buyers, not sellers.

b

Which of the following statements most correctly describes consumer behavior when deciding about purchase of a house? A. People always follow their friends and relatives when buying a house. B. Most people look at the price affordability in addition to their social and security needs. C. People are rarely concerned about cultural values when making a decision. D. Typically, people with different mind sets and different age groups will go for same type of housing when it comes to buying a new house.

b

Buyer Souza is attempting to determine the difference in semi-monthly payments between mortgage rates of 7% and 7.75% on a mortgage of $203,100 amortized over twenty years and payable on a semi-monthly basis. Which one of the following is the correct answer? a. $57.45. b. $44.61. c. $89.59. d. $41.16.

b Mortgage payment factor for a semi-monthly payment at 7% amortized over 20 years is 3.841040. 203.100 x 3.841040 = $780.11. Mortgage payment factor for a semi-monthly payment at 7.75% amortized over 20 years is 4.060672. 203.100 x 4.060672 = $824.72. $824.72 - $780.11 = $44.61.

Salesperson Chow of ABC Realty Inc. is calculating the area of a one and one-half storey residential property with two dormers on the upper floor as illustrated below. Which of the following is the correct square footage (rounded to 1 decimal)? (1 square metre = 10.76 square feet) a. 187.6 square feet. b. 2,164.9 square feet. c. 2,018.6 square feet. d. 201.2 square feet.

b. Main floor; 16.2 m. x 7.5 m. = 121.5 sq. m., Second floor; 16.2 m. x 4.5 m. = 72.9 sq. m., Dormers; 1.7 m. x 2 m. = 3.4 sq. m. x 2 = 6.8 sq. m. Total area; 121.5 + 72.9 + 6.8 = 201.2 sq. m. This question requires a conversion to square feet. 201.2 x 10.76 = 2,164.9 sq. ft.

A real estate brokerage is treated as a business entity. Which of the following statements is correct in this regard? A. If the brokerage is a sole proprietorship, there is an assurance of continuity of business after the death of the owner. B. A brokerage as a corporation must hire a Broker of Record who is responsible for compliance with REBBA 2002. C. In case of partnership, each partner is severally and jointly responsible for the liabilities of the brokerage business. D. For trading purposes, REBBA 2002 does not differentiate between a corporation, partnership or a sole proprietorship.

c

Builder Alvarez is considering the acquisition of a 1.5 acre parcel of land in a rural area. According to township officials, the property can be severed into three equal parcels, provided that a 15% allocation for a footpath is deeded to the township. Which of the following is the correct square footage for each parcel? a. 65,340 square feet. b. 21,780 square feet. c. 18,513 square feet. d. 55,539 square feet.

c

Investor Morris is seriously considering the acquisition of a rental property with a potential gross income of $44,000 per annum. The allowance for vacancy and bad debts is 4% of potential gross income and annual operating expenses are estimated to be $21,375. The value of the building based on a capitalization rate of 10.5% is: a. $203,571. b. $226,250. c. $198,714. d. $219,083.

c

Over the years, real estate salespeople have participated in various types of commission arrangements based on policies of individual brokerages. Which of the following is a correct statement regarding such arrangements? a. In most areas of the province, real estate salespeople, including employees and independent contractors, are usually paid a fixed salary. b. It is not possible for the listing salesperson to earn more commission on a transaction than the selling salesperson. c. A registered real estate salesperson can earn commission by listing a property that is sold by a different salesperson. d. According to REBBA 2002, employee salespeople must be on a desk fee plan and independent contractors must be on a conventional commission plan.

c

Patricia Wong owns a two-storey home currently valued at $195,000 and is contemplating the construction of an attached double garage. The actual cost of the garage is estimated at $29,000, however, market research suggests that the garage addition would add approximately $22,000 to the value of the total property. Which principle of value best describes this situation? a. Principle of highest and best use. b. Principle of supply and demand. c. Principle of contribution. d. Principle of progression.

c

Registered salespeople are required to successfully complete certain mandatory courses as part of a two-year articling period. Which of the following is a correct statement with regard to such courses? a. The mandatory articling courses are a requirement for salespeople with independent contractor status, but not for salespeople who are employees. b. Successful completion of the articling courses qualifies the registrant as a real estate appraiser. c. The mandatory articling programme consisting of three courses must be completed within the two-year period in order for a salesperson to qualify for renewal of registration. d. Completion of the courses in the mandatory articling programme qualifies the registrant for broker registration.

c

Seller Brown is considering the sale of his two-storey home in Westville. A real estate salesperson estimates a selling price of $179,000, based on comparable sales in the immediate area and the availability of other similar properties. This scenario describes an estimate of: a. Investment value b. Objective value c. Market value d. Market price

c

Seller Smith owns a rundown property near the downtown area of Westville. The house is worth approximately $40,000 and the lot (assuming residential use) is valued at $110,000. However, the property is currently commercially zoned and similar properties have recently sold in the $190,000 to $200,000 range as development sites for new commercial buildings. Smith insists that he obtain ($40,000 + $195,000) $235,000 for the property. The listing salesperson is attempting to convince Smith that the rundown home does not add value to the property. Which principle of value applies most directly to this situation? a. Principle of progression. b. Principle of surplus productivity. c. Principle of consistent use. d. Principle of supply and demand.

c

Which of the following is a correct example of subjective value? A. An owner spending $20,000 to make a recreational room in the basement. B. A builder spending $110,000 to buy land and another $175,000 to make the structure. C. Owner Bright spending $3,500 to paint the entire house before listing and increasing the list price by $8,000. D. A developer purchasing 12 acres of development land at the rate of $85,000 per acre.

c

Which of the following is an example of subjective value? A. An owner making a recreation room by spending $25,000. B. The cost of replacing the roof is $3,600. C. A builder spending $12,000 on upgrades to a home and asking for $15,000 more. D. A property sold a week ago for $285,000.

c

Which of the following statements is correct about organized real estate? A. OREA® is responsible for licensing of real estate salespersons in the province of Ontario. B. All registrants must abide by the CREA® Code of Ethics. C. REBBA 2002 does not require any registrant to become a member of organized real estate. D. It is mandatory for every registrant to become a member of organized real estate.

c

Which of the following statements is incorrect regarding real estate salespersons in Ontario? A. Upon completion of salesperson registration, if a salesperson wants to obtain the FRI designation, he will contact Real Estate Institute of Canada. B. An individual working as an independent contractor for a brokerage is not required to maintain any trust account for deposits or commissions. C. All salespersons in Ontario who sell new homes are exempt under REBBA 2002 from having registration. D. When an offer is received for a listed property, the salesperson cannot decide whether to accept, reject or counter the offer.

c

Which of the following would be an economic indicator used by economists primarily to track consumer demand in the marketplace? a. Statistics on vacancy rates. b. Statistics on household composition. c. Retail sales statistics. d. Statistics on capital investments.

c

The real estate market has a number of unique characteristics. What would be one of these unique characteristics? a. If the demand for real estate increases or decreases, the supply can easily be increased or decreased. b. Real estate transactions are public transactions as consumers now have access on the internet to the sales data of all properties. c. The real estate market is international now that the majority of buyers use the internet to search for properties. d. The location of real estate is fixed and this makes real estate especially subject to local supply and demand forces.

d

The total assessment in a municipality is $63,000,000 and the estimated budget for the coming year is $1,875,000. What would be the tax rate for the municipality? a. 0.0336% b. 3.36% c. 29.76% d. 2.98%

d

The City of Durham requires that a lot must have a minimum of 1,200 square metres to obtain a building permit. Seller Smith has a lot measuring 92.5 feet by 145.20 feet. The maximum coverage permitted (square feet/metres on the main floor) is 12% of the entire lot size. Select the correct response for the following two questions. (1) Does Smith's lot meet minimum standards; and (2) If the lot does, what would be the maximum square metres allowed on the main level area of Smith's home (rounded to the nearest square metre)? a. Yes, the lot meets minimum standards and the maximum main living area permitted is 144 square metres. b. Yes, the lot meets minimum standards and the maximum main living area permitted is 150 square metres. c. No, the lot does not meet minimum standards and therefore a maximum main living area does not apply. d. Yes, the lot meets minimum standards and the maximum main living area permitted is 162 square metres.

c 92.5 ft. x 145.20 ft. = 13,431 sq. ft. x 0.093 = 1,249.08 sq. m. x 12% = 149.89 sq. m. The lot size exceeds the minimum required and, based on 12% lot coverage, the maximum living area would be 150 sq. m. (rounded).

A real estate salesperson may have employee status with the brokerage or may have independent contractor status. According to the Real Estate and Business Brokers Act, 2002, what is the relationship between the brokerage and the brokerage's independent contractor salespeople? a. An independent contractor salesperson is not subject to any controls or supervision by the brokerage. b. The brokerage is not responsible for the conduct of salespeople who are independent contractors. c. An independent contractor salesperson is an employee for taxation purposes only and in all other respects is an independent contractor with no controls or supervision by the brokerage. d. Independent contractor status does not eliminate the responsibility of the brokerage for the conduct of the salesperson.

d

A salesperson cannot claim commission unless he has paid: A. Brokerage desk fees. B. Local board fees. C. OREA® and CREA® fees. D. RECO Insurance premiums

d

A seller recently listed and sold a bungalow located in Westville. The buyer was particularly interested in buying the property and paid a premium price because it was originally designed and built as a wheelchair accessible home. Which of the following best describes the value concept applied by the buyer? a. The concept of substitution. b. The concept of objective value. c. The concept of market value. d. The concept of value in use.

d

A typical real estate brokerage would prefer to hire Independent Contractor salespersons instead of the Employee because: A. Commission charged by Independent Contractors must be in compliance with brokerage policies, but Employee salespeople decide their own commission. B. Compliance with REBBA 2002 is required only for Employee salespeople but not for Independent Contractors. C. Independent contractor salespeople are required to attend the brokerage office during fixed office hours. D. Lesser control and supervision may be required for Independent Contractor salespersons as compared to Employee salespersons.

d

Based on the condominium concept in Ontario, select the statement that correctly completes the following sentence: When a condominium is created: a. the condominium corporation is formed to ensure that the unit owners are not responsible or liable for the expenses to maintain the common elements b. the condominium corporation holds title to all of the units on behalf of the unit owners. c. the condominium corporation is the landlord of the unit owners and all of the unit owners have the legal status of tenant. d. the legal structure of the condominium is set out in the Declaration and Description.

d

Calculate the area of the parallelogram shown below. All measurements are in metres. Length = 68m Perpendicular Distance = 20 a. 1,836 square metres. b. 680 square metres. c. 1,182 square metres. d. 1,360 square metres.

d

For a salesperson selling residential resales, which of the following statements is correct with respect to the typical listing/selling process? a. Salespeople who list properties do not normally get involved in prospecting for buyers. b. When a buyer calls to ask about an advertised property, the best place for the first meeting with the buyer is at the property that they called about. c. It is important for a salesperson to keep in mind that every listing is saleable. d. A salesperson should try to match properties to the buyer's needs, wants and financial capabilities.

d

One of the main purposes of the Personal Information Protection and Electronic Documents Act is to: a. facilitate the use of personal information on consumers by businesses. b. set guidelines for the creation and distribution of credit reports. c. assist businesses in advertising, telemarketing and electronic commerce. d. ensure that personal information is used only for the purpose intended.

d

Salesperson Garcia with ABC Realty Inc. is on a 60/40 split with the brokerage and Salesperson Lee, also with ABC Realty Inc., has reached a higher level of sales and is on a 70/30 split. (Note: The brokerage retains the smaller portion.) The office policy for ABC Realty Inc. states the commission allocation between the listing and selling portion of the commission is 50/50. Salesperson Garcia obtains a listing for $236,800 that is sold by Salesperson Lee for $234,800 and the commission rate is 5%. What is the amount of commission payable to the brokerage, to Garcia and to Lee? a. ABC Realty Inc.: $4,144; Garcia: $3,552; Lee: $4,144. b. ABC Realty Inc.: $5,870; Garcia: $2,348; Lee: $3,522. c. ABC Realty Inc.: $5,920; Garcia: $3,522; Lee: $4,109. d. ABC Realty Inc.: $4,109; Garcia: $3,522; Lee: $4,109.

d

Salesperson Martin is preparing a listing presentation and is comparing three recent sales. House A, listed at $149,900 ultimately sold for $8,100 less. House B, listed at $141,000, sold for $133,900. House C, listed at $146,500, sold for $135,780. For each sale calculate the sale price as a percentage of listed price and rank these three sales from lowest to highest percentage. a. House A, House B, House C. b. House C, House B, House A. c. House B, House C, House A. d. House C, House A, House B.

d

Salesperson Smith received $11,286.28 as 65% of ABC Realty Inc.'s 5.5% commission. What was the sale price of the house? a. $310,850. b. $305,000. c. $317,250. d. $315,700.

d

Which if the following is a correct statement regarding real estate market? A. When the number of properties available for sale roughly equals the number of buyers, the values start increasing. B. When the market starts correcting itself, consumer confidence increases and demand for real estate suddenly goes up. C. Real estate market is rarely impacted by demographic changes as housing is a primary necessity and everyone needs a shelter. MiniCram Real Estate Exam Course 1 MiniCram Notes 48 D. When several builders start new subdivisions, resulting in excessive inventory of new houses, the prices may fall.

d

Which of the following RECO insurance coverage does not have a provision for deductible when a salesperson makes a claim? A. Errors and Omissions B. Commission Protection C. Negligent Misrepresentation D. Consumer Deposit Protection

d

Which of the following disclosures is mandatory for consumer protection when a salesperson presents an offer to his client for signing? A. The number of years the salesperson has been registered. B. Motivational information of the client. C. Commission split of the salesperson with his brokerage. D. The role of the brokerage in the transaction.

d

Which of the following individuals must be registered under the Real Estate and Business Brokers Act, 2002, to carry out duties as described below? a. An auctioneer who auctions a home in the normal course of their auctioneering business. b. An individual practicing as a solicitor where the trade is made in the normal course of the solicitor's practice. c. An individual selling property owned by that individual. d. A salesperson who is employed by a real estate brokerage but is selling only new homes.

d

Which of the following statements correctly applies to the duties and responsibilities of a property manager? A property manager is basically a rental agent and building superintendent. b property manager is responsible for completing a market value appraisal for the property if the owner so requests. c property manager is responsible for providing information to and negotiating with anyone who is considering buying the property. d property manager is an administrator who assumes the executive functions necessary to meet the objectives of the owner of the property.

d

Buyer Holmes is applying for a mortgage loan of $95,000 with an annual interest rate of 9.5% and blended monthly payments of $817.98 including both principal and interest. The taxes on the property being mortgaged are $1,900 per annum. The buyer has a gross income of $43,500 per annum. The buyer's gross debt service ratio is: a. 27.67%. b. 21.84%. c. 22.56%. d. 26.93%.

d The formula is: GDS = PIT ÷ Income. ($817.98 x 12) + $1,900 = $9.815.76 + $1,900 = $11,715.76 ÷ $43,500 = 0.2693 or 26.93%.

A buyer will be making blended monthly mortgage payments of $905.82 including principal and interest. The taxes on the property are $210.00 per month. With a gross debt service ratio of 32%, what minimum annual gross income would the buyer have to earn to qualify for the mortgage loan? a. $42,847.49. b. $34,869.38. c. $34,624.50. d. $41,843.25.

d The formula is: Income = PIT ÷ GDS. (($905.82 + $210)) x 12) ÷ 32% (or .32) = ($1,115.82 x 12) ÷ .32 = $13,389.84 ÷ .32 = $41,843.25.

Simon Leung has a personal loan of $21,000 with an interest rate of 15% per annum, calculated and compounded monthly. Assuming that no principal payments are made, what amount of interest only will Leung owe at the end of three months? a. $1,050.00. b. $478.12. c. $1,575.00. d. $797.38.

d. The formula is $21,000 (1 + 15/12)3 = $21,000 (1.0125)3 = $21,000 (1.0125 x 1.0125 x 1.0125) = $21,000 x 1.0379707 = $21,797.38 - $21,000 = $797.38 interest only.

Andrew Baker wants to construct a small addition to his existing house. Local zoning bylaws permit such an addition provided it does not exceed 18% of the existing main level floor area. Baker's house currently has 960 square feet on the main level. Which of the following measurements for this addition would comply with the municipal requirements? a. 4.25 metres x 4.15 metres. b. 4.20 metres x 4.05 metres. c. 3.89 metres x 4.28 metres. d. 4.07 metres x 3.94 metres.

d. The maximum area of the addition cannot exceed 16.07 sq. m. (960 sq. ft. x 18% = 172.80 x 0.093 = 16.07 sq. m.). 4.07 x 3.94 = 16.03 sq. m.