real estate state exam 1

The Gomez family just moved into their dream home. They purchased the home for $264,985, and it appraised at $272,402. The assessment ratio for their area is 25%, and the tax rate for their area is 2.8%. What is their annual tax bill?

$1,907

Using the capitalization formula, what is the value if the net operating income is $20,000 and the rate of capitalization is 10%?

$200,000

Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase?

$208,000

Rachel just sold her home and paid $18,427 in closing costs. Her brokerage fee, which is included in that figure, was 6%. She netted $230,063. What were her non-brokerage fee-related closing costs? Round to the nearest dollar.

$3,518

A buyer is securing a home loan for $500,000. The state mortgage recording tax rate is $0.115 per $100. What's the mortgage recording tax?

$575

Related to real estate financing, how much is a point?

1% of loan value

What is the ROI for this scenario? An investor pays $80,000 cash toward the purchase price, finances the rest, and has a cash flow of $11,000 after repairs and debt services.

13.75%

Assuming that the seller pays for the date of closing, if closing is July 7, how many days will the seller be responsible for paying using a statutory year?

187 days

Your client, a builder, is considering buying three adjacent lots. They each have the same depth: 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?

446 feet

Which of these statements best represents what happens after a federal fair housing complaint is made?

A fair housing specialist will review the complaint.

Sondrine's beach cottage has a right of way that allows nearby residents to get to the beach. What is the primary difference between a right of way and an easement?

A right of way provides a pass-through, but not a right to use the property.

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?

Acceleration

The town planning and zoning board is considering some new zoning regulations to ensure that one of the neighborhoods maintains its designation on the National Register of Historic Places. What type of zoning are they likely to enact?

Aesthetic zoning

______ is an offer to purchase a specific piece of real estate that does not obligate the offeror to buy it.

An option contract

Shane's buyers learned during the inspection that there was water damage around the fireplace and that the chimney needed new flashing and to be repointed. To whom must Shane disclose that information?

Any party to the transaction

Shannon doesn't understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?

Appraisal

Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?

Barbie owns two-thirds, and Midge owns one-third.

Liza is doing a comparative market analysis. Comparable A has an adjusted price of $118,000; comparable B has an adjusted price of $109,500; and comparable C has an adjusted price of $122,900. How should Liza use this data?

Base the list price on the comparable most similar to the subject property.

Harrison is selling his property in Oklahoma. Several buyers showed interest in the property at a recent open house. When does Harrison need to provide a buyer with the disclosure statement?

Before contract acceptance

Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?

Bilateral

Jennifer, an experienced salesperson, hires an unlicensed assistant, Suzanne. Jennifer's on vacation, and in her absence, Suzanne discussed some contract terms with one of Jennifer's clients. Who's responsible for Suzanne's behavior?

Both Jennifer and her broker are responsible for supervising Suzanne, and both could be disciplined.

You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who's your client?

Buyer

Marla, a buyer, is in breach of her purchase contract with seller Carlton. The contract notes that liquidated damages will be equal to the earnest money deposit. Which of these statements is true?

Carlton is limited to accepting the amount of damages specified in the contract.

Which economic principle is related to supply and demand?

Competition

Jerry is holding an open house for a property he has listed. He speaks to several visitors, but none of them discuss making an offer. What are these visitors called?

Customers

Private mortgage insurance protects the lender in case the borrower takes which of the following actions?

Defaults on the loan

You're a real estate broker supervising 24 licensees. What's the most effective way for you to protect your firm from lawsuits?

Develop, implement, and train firm members on policies and procedures.

How is the break-even point calculated for a percentage lease?

Divide the monthly base rent by the percentage the landlord established

Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?

Easement by prescription

Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that?

Ed should remind them that every dwelling, no matter the age or size, should have a home inspection.

What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?

Elements and units

Because of the topography of Elsie's and Lawrence's respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence's property line. What word or phrase best describes Elsie's fence?

Encroachment

Which of these is the most accurate definition of equitable title as it relates to a real estate purchase contract?

Equitable title is the right to obtain full ownership of a property when a certain condition has been met.

Which of the following statements about escrow accounts is correct?

Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.

Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?

FHA

Frances collected an earnest money check from her client, but didn't have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?

Frances is guilty of commingling.

Which of the following terms may be defined as a form of depreciation or loss in value caused by defects in design?

Functional obsolescence

What hazard do mining activities, landfills, or agricultural pesticides contribute to?

Groundwater contamination

A landlord has an available unit but refuses to show it to several applicants. These applicants are all single women with children. The applicants who are shown the apartment are all individuals or couples without children. In what way is the landlord violating fair housing law?

He is discriminating against people based on familial status by refusing to show available housing

Jillian's lease for her apartment has a right of first refusal clause. What kind of obligation does this create for her landlord Kathy?

If Kathy decides to sell, she must offer it to Jillian for purchase first.

Amira's seller Tom just received the news that his buyers are walking away from the sale. They weren't willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What's the most likely reason for that?

If they see the report, they'll be required to disclose any adverse findings.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______.

In writing, and in accordance with uniform standards

Hannah wasn't able to get the financing to open her boutique, so her mother became a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this?

Indemnification

How does title insurance affect the lender?

It protects the lender from loss due to defective titles.

Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.

License

Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence?

Listing a property in the main part of the city that she'll market as a fixer-upper

Putting clients' interests ahead of all others describes which fiduciary duty?

Loyalty

Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death?

Lucas and Tom

A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's this an example of?

Market allocation

You represent seller April, who is your Uncle Clyde's girlfriend. You receive an offer from Barry on behalf of a prospective buyer. Whose interests do you represent, and in what order?

Only April's

Trenton is a real estate licensee who's suspected of discriminating against women who are interested in buying a condo in his building. HUD sends four clients his way, each with equivalent credit scores and employment histories. Two are male and two are female. What investigative technique is HUD using?

Paired testing

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements is applied last?

Physical characteristics

Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?

Price

Three brokers meet and agree that all of their listing contracts will have one-year terms. Of which type of antitrust violation is this an example?

Price fixing

Trudy loved her new neighbors. The investor couple bought every available house on Trudy's block and was working hard to renovate them and increase their value. Trudy decided that she'd sit back, relax, and let her property's value go up, too, thanks to ______.

Progression

Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?

Rectangular government survey

For farmers and others who live in rural communities, a ______ loan may be available. One benefit of these loans is the option for a longer payback period.

Rural development

If a private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have?

Subchapter S corporation

Eva, Stella, and Lynn owned a vacation home two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?

Tenancy in common

Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement?

The Closing Agent

Which of these scenarios would require an environmental impact statement?

The U.S. National Park Service plans to build a new visitor center on property owned by the federal government.

A "homes for sale" magazine contains the following ad: "Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!" Which of these statements is true?

The ad complies with TILA because it doesn't contain any of the trigger terms that require full disclosure of all financing terms.

Who is responsible for ensuring that a firm's associated licensees comply with all real estate-related federal regulations?

The broker shares this responsibility with licensees.

Which of the following statements is true if the seller elects to accept the deposit as liquidated damages?

The buyer is relieved from any further liability to or legal action from the seller.

Henrietta is 17 years old. She wants to sell the property given to her by her grandmother. Which covenant provided by the general warranty deed may prevent her from doing so?

The covenant of the right to convey

What happens after a foreclosure if there isn't enough money from the sale to pay off all of the lien holders against a property?

The former owner may owe a debt to lien holders who aren't fully paid.

When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale?

The licensee is permitted to list other properties for sale, even if they're competing properties.

Your clients, Bill and Stacey, are interested in purchasing a piece of land that has several acres of wetlands. Which of the following is a true statement?

The presence of wetlands affects use of the property and should always be noted on appraisal reports.

Agency may be legally terminated in which of the following ways?

The principal broker becomes incapacitated.

As Brandon's listing agent, Lily must disclose all known material facts relative to Brandon's property. Which of the following is a zoning-related fact that Lily might have to disclose to prospective buyers?

The property is right in the middle of a historic preservation district.

Licensee Randy has a written listing agreement with Brent, a seller. The buyer is Tim. Who is Randy's client?

The seller (Brent)

What's providing legal advice to a client considered?

The unauthorized practice of law

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.

An attorney receives a request to have an appraisal performed on a property inheritance that she is transferring from her deceased client's estate to his heir. Which of these statements is true?

This isn't a federally related transaction and under federal law an appraisal isn't required.

What's one of the ways that bulk zoning achieves its objectives?

Through setbacks

Harriet, an out-of-state licensee, is friends with Tonya, a licensee who works with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which one of the following statements about this fee is true?

Tonya must pay the referral fee through her brokerage firm to Harriet's brokerage firm.

In a real estate transaction in which you represent the seller, your duty to other parties is to ______

Treat them honestly and fairly

Which of these would be a breach of Margo's fiduciary duty of confidentiality?

When asked by the buyer's agent if the seller was firm on his price, Margo said, "Everything's negotiable," and winked at the other agent.

Your client is purchasing a single-family home with a VA-guaranteed loan. The listing price is $150,000. Is an appraisal by a certified appraiser required?

Yes, and since the purchase is financed with a VA-guaranteed loan, the appraiser must be VA certified.