Real Estate Final Exam Practice Questions I Got Wrong

A buyer has a 15-year, $250,000 loan with a 5.5% interest rate. How much of the first monthly payment is interest?

$1,145.83

A property is generating $100,000 in income and has expenses of $25,000. The investor pays $3,000 toward mortgage principal each year and $32,000 toward interest, plus another $4,000 in income taxes. What is the before-tax cash flow?

$40,000

What is a mill rate?

1/10 of a cent

According to Article 9A, how long does a consumer have to cancel a contract on subdivided land?

10 days

An adjustable rate mortgage has an interest rate of 5% and a lifetime cap of 6%. What's the maximum rate that may be charged at any point during the life of the loan?

11%

Tess has $385 in monthly non-housing debt obligations, and her anticipated mortgage payment is $1,103. Her gross income is $7,598, and her net income is $5,815. What's her total DTI (debt-to-income ratio)?

19.58%

In what year was the Americans with Disabilities Act made law?

1990

Woody has a lease with an option to buy on his penthouse apartment. Each month, 20% of his lease payment goes toward ________.

A down payment toward the purchase price

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in?

A lien theory state

When is the replacement cost calculated?

After a review of the property

With certain exceptions, generally in New York, which properties within an assessing unit must be assessed using the same percentage rate?

All properties

All of the following are true regarding implied agreements EXCEPT which one?

An implied agreement is based on a formal agreement.

What is static risk?

An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism

At a sales meeting you learn that one of your firm's listings must sell that week. "Get 'er sold!" your broker tells you. "The clients must move out in 40 days." You'd really like to get that sale. What can you tell prospective buyers?

"I'd love to show you one of my firm's listings."

Which of the following is typically used for purposes other than a prospective listing or sale?

BPO

In older houses built before 1950, which type of electrical system would frequently be found?

BX

Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?

Broker's price opinion

Jason is planning to invest in a new commercial development. He'd like to invest $400,000 and secure another $100,000 through financing. After shopping around, Jason could not find financing at an affordable rate. Of what type of risk is Jason the victim?

Capital Risk

Which of the following is a listing agent's duty?

Caution the seller against sharing sensitive information during the listing term.

When licensees follow through on what prospects have asked, arrive for meetings on time, and come prepared, what trait are they exhibiting?

Competence

What deed warranty guarantees that the seller is the actual owner of the property being conveyed?

Covenant of seisin

Javier represents Marcus, who's selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben's relationship to Javier?

Customer

How often is public water is tested for bacterial contamination?

Daily

Which one of the following actions is a licensee required to take to fulfill a fiduciary duty?

Disclose personal interest and licensed status when buying property for personal use.

In addition to providing a disclosure of any lead-based paint hazards in homes built before 1978, what must a seller's agent provide to prospective buyers?

EPA lead safety pamphlet

What must sellers provide prospective buyers of homes built prior to 1978, in addition to the federally required disclosure form?

EPA lead safety pamphlet

Which one of the following options provides three valid examples of a private land use control?

Easement, lien, deed restriction

Which of the following is a tactic used by a predatory lender?

Encouraging debt

The state's claim to property when a property owner dies, leaving no will, heirs or creditors, is the power of ______.

Escheat

How is the broker's commission usually paid out?

Escrow creates checks for both agents' brokerages, which in turn cut checks to the agents for their commission split.

Jake, who was leasing a house, retained possession even after his right to possess had terminated. Jake has a(n) ______.

Estate at sufferance

Raine is a new property manager. Which of the following will she need to know?

Fair housing laws

What is meant by "first substantive contact"?

First meaningful conversation about real estate

Cooperative shareholders under a condop structure have ______.

Flexibility in selling and subletting, similar to that of condominium owners

What's supposed to be installed wherever water can be found, such as in bathrooms, kitchens, basements, utility rooms, garages, outdoors, and near swimming pools, to protect people from getting electrocuted?

GFCI

Which of these situations represents an illegal tie-in arrangement?

Grayson tells his seller client, Geneva, that he'll reduce the listing commission if Geneva uses MBS Title Services to close her transaction.

Why might you opt out of working with a buyer unless you're working under an agency agreement?

Having an agency agreement allows you to represent the buyer's interests.

Shana received a devise from her mother. What might this be?

Her mother's farm

Which of the following license types involves closely examining the condition of real property?

Home inspector

A borrower is using a gift to fund part of his home purchase. What criteria for the gift holds the most weight in the lender's eyes?

How long ago the gift was given

Which of the following describes a contract that exists based not on words, but on the parties' actions or behaviors?

Implied

Because of the employing party's lack of control over the individual, which of these is not classified as an employee?

Independent Contractor

If an investor realized a gain of $140,000 on the sale of an investment property and the depreciated amount was $20,000, what would happen?

Investor will pay 25% on the $20,000 and either 15% or 20% on the other $120,000.

Which of the following is true regarding the buyer's check for closing?

It must be in the form of a cashier's check or wired funds.

Septic systems must be designed by an engineer or architect who also certifies what aspect of the system?

It will not negatively impact the environment.

All of the following are true about an exclusive right-to-rent agreement EXCEPT __________.

It's an agreement between an owner/landlord and the real estate professional for the purpose of selling the property

In a title theory state, which of the following is a true statement?

It's generally much easier for a lender to foreclose on a property.

Jim represents Joel in the sale of Joel's country acreage and house. Jim's business partner, Rolly, informed Jim that he wants to put an offer in to purchase the property, with the intention to subdivide it. Which statement best represents the disclosure requirements regarding this transaction?

Jim must disclose that Rolly is his partner and that Rolly intends to subdivide the property.

Which of the following is a mortgagor's responsibility?

Keep the property in good repair.

The doctrine of "use it or lose it" is known as the doctrine of ______.

Laches

Property owners who live on or next to water have certain rights. An example of one of these rights includes ______.

Littoral

According to RESPA, what must the lender give to the borrower at either the time of loan application or within three days following application?

Loan Estimate

Which one of the following options includes an item that is deductible on an income tax return if specific criteria are met?

Loan origination fee

According to the New York Attorney General's Office, a possible penalty for violating fair housing law is ______.

Making the housing or loan available that has otherwise been denied to the complainant

Which individual might work for a mortgage brokerage, mortgage company, or bank?

Mortgage loan originator

According to the New York State Department of Taxation and Finance, which of the following is true?

Most taxpayers in New York receive two tax bills each year.

Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?

Multiple listing clause

Which organization establishes relationships with financial institutions to offer home ownership programs that include down payment assistance through grants and favorable terms?

NHF

Which entity oversees rent-controlled apartments in New York?

NYS Division of House and Community Renewal

Existing uses in a new zoning district or in a rezoned district can be grandfathered from compliance with the zoning requirements and is known as ________.

Non-conforming use

Which is the term for rights bestowed upon a person who does not have a right to occupy the property, only to use or cross?

Nonpossessory

Your seller client directs you to not do any showings until Monday, which is fine because you believe you have a buyer who will want to make an offer Monday. But on Sunday you get a call from another agent who has a very interested cash buyer who's leaving town that day and must see the property Sunday. What fiduciary duties are in conflict here?

Obedience and Loyalty

If you tell a buyer customer about the need of your firm's seller client to sell, in spite of the seller instructing that no one be told, what duty or duties are you breaking?

Obedience, loyalty, and confidentiality

Darren is meeting with a client at a coffeehouse, when the smell of freshly baked bread wafts out of the kitchen. They both smile and begin chatting about the memories the smell triggers. This is an example of what kind of anchor?

Olfactory

Properties owned or operated by religious organizations, government-owned properties, and charitable organizations could be eligible for what type of tax exemption?

Property tax exemption

Which of the following is true about property taxes?

Property taxes create a lien on a property until paid.

Which of these documents does NOT establish an agency relationship between a client and a licensee?

Purchase agreement

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?

Rent

A duplex is what type of property?

Residential

The process of protesting a tax assessment starts with _______.

Reviewing a tentative assessment roll

Which of these situations represents a unilateral contract?

Sherry promises to give Brent a ride home from work, and then doesn't show up.

Why should you have a conversation about financing for the property with the seller before you sign the listing agreement?

Some sellers can't accept, or won't qualify to accept, certain types of financing—such as FHA or VA loans—so you should know that up front.

A bargain and sale deed may come with or without covenants of warranty. In most states, if it contains covenants, it is known as a __________.

Special warranty deed

The government, in an effort to create more affordable housing, offers ______ for building housing for low-income individuals.

Tax credits

Where permitted, married couples usually hold property as ______.

Tenancy by the entirety

Under what policy name is Homeowners 4 (HO-4) known?

Tenants or cooperative owner policy (rental insurance)

Which type of pest may make mud tubes—tunnels that run along the walls—or shed tiny wings?

Termites

To claim unequal assessment, the taxpayer would have to prove _________.

That the property was assessed at a higher percentage of value than the average of all other properties on the assessment roll

Women didn't have protection under fair housing laws until sex was added to the list of protected classes when ______ passed.

The Housing and Community Development Act of 1974

After a few meetings, the Stinsons sign a listing agreement with broker Vera so she can sell their house. The house has already generated interest from a potential buyer named Sergei, who has spoken with Vera about the house's price and square footage. Which of the following is true about this situation?

The Stinsons and Vera have brokerage relationship agreement.

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law.

Select the statement that correctly exemplifies the covenant term.

The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on.

What title guarantees will Jody have when she buys a property at a foreclosure auction?

The covenant of seisin

What's the best definition of land?

The earth's surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects

The owner's covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property's legal owner. What's the third key piece of information?

The fact that the owner is not facing foreclosure

Under the 1986 New York Independent Contractor Law, there must be a written contract between the broker and the licensee that specifies the terms of their relationship. What is included in those terms?

The licensee did not execute the contract under duress.

What is financial risk?

The risk that is directly related to leverage

What is business risk?

The risk that the required return on investor capital will not be met

In a buyer agency relationship, what relationship does the seller have to the licensee?

The seller is the licensee's customer.

To whom do sub-agents working with buyer customers owe their duties?

The sellers and the seller's agents

Which one of the following statements about income tax rates is correct?

The tax rate on long-term capital gains is less than the tax rate for ordinary income.

If individuals want to use their property in a way that's not permitted by a zoning ordinance, they must submit a request for a variance to which one of the following groups?

The zoning board of appeals

Developer A has a project planned that does not conform to the community zoning regulations and wants to make a change request. Which local land use group would the developer ask, and for what?

The zoning board of appeals for a variance.

What's true of chlorofluorocarbons (CFCs)?

They They are nontoxic

Which of the following statements is true about septic systems?

They differ in the way they are installed.

When renewing your real estate license, how many continuing education hours are required to cover the topic of fair housing or discrimination?

Three

If you're a tax assessor, which of the following is true about your job?

To determine market value, I check other similar, nearby properties that have sold recently.

Issuing a pre-approval letter means that borrowers have completed the loan application and provided their debt, total income, and savings information, and the _______ has verified this information.

Underwriter

Belinda, a buyer, is about to submit a $40,000 earnest money deposit with a purchase contract on a house. It looks like the money will be held for about five weeks, and she thinks, "it sure would be great if that money could earn interest in the meantime." Can her earnest money deposit earn interest?

Yes, but only if she and the seller agree to it in writing.

The looser the lending standards, the __________________.

higher the interest rate