FINAL EXAM the real deal part 5

Buyer Cindy is being shown a house by licensee Craig. Cindy does not know if Craig represents the seller. This is the reason why property disclosure laws exist. recovery fund accounts are needed. escrow fund accounts are needed. agency disclosure laws exist.

property disclosure laws exist. ????

Salesperson Steve receives an hourly wage of $14 an hour from broker Clayton. Clayton tells the IRS Steve is an independent contractor. The IRS then says Steve has failed the __________ and does not qualify as an independent contractor.

salary test

A borrower sells a mortgaged property for less than what is owed on the loan balance. This is an example of a quick flip. a deep dive. a short sale. an equity sale.

short sale

What should brokers hold occasionally to make sure all agents are given and hear the same information?

staff meetings

The end result of rescinding the contract is that the contract is enforceable. that the contract has been executed. that the contract is null and void. that the contract has been modified but is still valid.

that the contract is null and void. ????

Salesperson Pam was trying to remember the basic difference between an FHA and a VA loan. The answer is

the FHA insures loans, the VA guarantees them.

Albert had the legal authority to sign the $128,000 sales contract for a property held in trust. Albert is

the executor of the estate.

Licensee Katy sees a legal description that includes a subdivision plat map. This indicates the legal description method utilized is

the lot and block system.

In construction, the term "pitch" refers to

the slope of the roof.

Licensee Finn reported to the lender that the sales price was $5,000 higher than it actually was as the buyer requested him to. This is an example of intentional fraud. unintentional fraud. negligent misrepresentation. legal obedience.

unintentional fraud.

What is the balance on an amortized loan of $110,000 after the first payment if the interest rate is 5.5% with a monthly P&I payment of $568?

$109,936 HOW: Principal paid = monthly payment - (loan amount x rate /12) 568 - (110,000 x 5.5%/12) = 63.83333333 110,000 - 63.83333333 = 109,936.1667 109,936

In a comparative market analysis, the subject property has 2 bedrooms, 2 baths, a 1/2 acre lot and a swimming pool. A $115,000 comparable has 2 bedrooms, 1 bathroom, no pool, a 1/2 acre lot, and a screened porch. The appraiser adjusts by $9,000 for the bath, $11,000 for the pool, and $5,800 for the porch. What is the indicated value of the subject?

$129,200

A property's value is $125,000 and its land value is $10,000. Assuming a depreciation term of 35 years, what is the amount of annual depreciation?

$3,286 HOW: STEP 1: 125,000 -10,000 = 115,000 STEP 2: 115,000 / 35 = 3,285.71 (3,286)

A rental house has monthly gross income of $3,000. A suitable gross income multiplier derived from market data is 13. What estimated sale price (to the nearest $1,000) is indicated?

$468,000 HOW: 3,000 x 12 x 13 = 468,000

A small apartment building has a NOI of $40,000, interest expense of $14,000 and annual depreciation of $6,000. Assuming a 30% tax bracket, what is its income tax liability?

$6,000

Terry just received her temporary Mississippi real estate license. For how long can Terry practice real estate before her license expires?

1 year

How many discount points are required to increase the percentage yield on a mortgage from 6% to 7.5%?

1.5??????

Lamar sells another broker's $800,000 listing for $785,000 at a commission rate of 6.5%. Lamar has a 40% commission split with his broker. If there is also a 50% brokerage split, what commission will Lamar receive? $15,308 $10,205 $15,600 $10,400

10,205

A duplex generates $1,400 rent for each of its two units per month. The property has been recently appraised for $350,000. What is this property's GIM?

10.4 HOW: 1,400 x2 = 2,800 2,800 x12 = 33,600 350,000 / 33,600 = 10.41 (10.4)

Once an applicant has been accepted for the salesperson's license written exam, how long does he or she have to sit the exam? 2 weeks 6 months 30 days 2 months

2 months

A property valued at $295,000 has a gross rent multiplier of 135. What is this property's monthly income? $2,458 $2,185 $2,525 $2,328

2,185

Jennifer wants to net $35,000 on her house. Her closing costs will be 7,500 plus a 7% commission. She owes $185,000 on her loan. What should the sale price be (round to the nearest $1,000)?

228,000

Assume a loan balance of $174,000, a monthly payment of $1,395, and an interest rate of 8%. On next month's payment, how much of the $1,395 will be applied to principal? $235 $1,395 $271 $303

235

If a salesperson wishes to change her responsible broker, the Commission must be notified of the change, within ____ of terminating agency with the original responsible broker.

3 days

Taxes on the property buyer Tamara is purchasing are $8,200, due on December 31. If the closing is set for June 29th, using the 365-day method, how much of the taxes will be credited to the buyer? (Assume it is not a leap year and the day of closing belongs to the seller.) $4,044 $4,178 $4,077 $4,123

4,044

Homeowner Dean owns the northwestern 1/8 of the northeastern 1/2 of the southwestern 1/8 of Section 31. How many acres is that property?

5 acres

The ___ members of the Mississippi Real Estate Commission are appointed by _________.

5, Governor of Mississippi

Kate bought a home for $210,000. However, all the town's jobs disappeared when the local factory closed. Kate sold this home one year later for $120,000. What was her percentage of loss?

57% HOW: 120,000/210,000 = 0.5714 x 100 = 57%

Emma's property is assessed at $650,000. Her property qualified for a $50,000 homestead tax exemption and was appraised at $800,000. What is the taxable value of Emma's property?

600,000

Which of the following properties would most likely be exempted from real estate taxes? A 1,000 acre corn field A car manufacturing facility A building owned by the Department of Transportation A low-rise office building

A building owned by the Department of Transportation

Both the agent and seller just signed the listing agreement. What must the licensee give to the seller now?

A copy of the signed listing agreement

Mandy recently bought a condominium unit. What does Mandy actually own? A fee simple interest in an airspace and tenancy in common interest in a share of common elements A joint tenancy interest in a building and a tenancy in severalty in a unit Shares in a corporation and a proprietary lease in a physical unit The right to occupy a unit from the condominium association

A fee simple interest in an airspace and tenancy in common interest in a share of common elements

Which of the following is an example of an involuntary lien? A first mortgage on a property A judgment lien A second mortgage on a property A car loan

A first mortgage on a property

Which of the following best describes the prohibited activity of redlining?

A lender restricting the number of loans in certain areas of a community because of its racial or ethnic makeup.

What mortgage clause allows a lender to charge extra interest if the loan is paid off before the normal completion date?

A prepayment penalty clause

Jamal recently purchased a cooperative's stock and moved into one of the cooperative's units. What type of lease does Jamal have with the cooperative corporation?

A proprietary lease

Bill's monthly mortgage payments were $1,300. However, Bill's final payment was $72,000. What type of mortgage did Bill have?

A straight term loan

What type of agent has power of attorney?

A universal agent

Seller Justin just listed with broker Brittany. What should Brittany install on Justin's property before leaving the listing meeting?

A welcome flag

What type of zoning requires that new buildings conform to specific types of architecture?

Aesthetic zoning

If a contractor is planning to build a new apartment complex, he or she needs to consult the _______ to avoid any potential fines by the United States Attorney General.

Americans with Disabilities Act Standards

Which of the following statements is FALSE regarding a real estate business? An individual does not have to have a definite place of business but a partnership, association or corporation licensed as a real estate broker must do so. A definite place of business must prominently display the certificate of registration as broker and the certificate of each salesperson employed by the broker. Every individual, partnership, association or corporation licensed as a real estate broker must have a definite place of business. If a broker has more than 1 office, the broker must display a branch office license in each branch office and the broker remains responsible for the real estate practices of those licensees.

An individual does not have to have a definite place of business but a partnership, association or corporation licensed as a real estate broker must do so.

What is the name of a bilateral agreement between a seller, (the vendor) and a buyer (the vendee) in which the vendor defers receipt of the entire purchase price of a property over a specified period of time?

An installment sales contract

What powdery mineral is a health hazard when airborne?

Asbestos

Salesperson Rashad is writing an advertisement for one of his broker's listings. Which of the following phrases should he avoid?

Baptist subdivision

Why would municipal governments be concerned if property values are falling?

Because the majority of their revenue comes from real estate taxes. When property values fall, revenue for municipal governments also falls.

In showing properties for sale, which of the following is a recommended course of action? Allow the seller's pets to roam around and interact with guests. Agents should tell the next door neighbors to stay home. Before the open house, the agent should open the drapes on all windows to let in the natural light. Make sure the home looks "lived in" by having possessions visible to the public.

Before the open house, the agent should open the drapes on all windows to let in the natural light.

Which of the following is a requirement for qualifying for a broker's license? Being at least 21 years old Having a letter of recommendation from the MREC Having a college degree Having completed 25 transactions as a salesperson

Being at least 21 years old

Broker James received an order from a court of competent jurisdiction directing the disbursement of the escrow funds. What action should broker James take?

Broker James must disburse the escrow moneys according to the terms of the order.

Which of the following would qualify as residential property?

Condominiums and cooperatives

An apartment complex's units have had their rusting bathroom drain pipes replaced with PVC. What type of maintenance is this?

Corrective Maintence

Bert just purchased his first property. To what level(s) of government will Bert have to pay real estate taxes?

County and local

A buyer will receive a water bill for an estimated $30 at the end of the month. At closing, the seller has used an estimated $24 of the water. What should appear on the closing statement?

Credit the seller for $6, debit the buyer for $6

Seller Deangelo agreed to mediate the radon gas problem in his basement within 31 days. It has been 31 days and he still has not addressed the issue. What is the current status of the sales contract? It is not affected and is in force. The buyer must now address the problem within 31 days. Deangelo will now receive $5,000 less from the buyer. Deangelo has defaulted on the contract.

Deangelo has defaulted on the contract. ???????

The seller's remaining mortgage shown on a closing statement would be shown as

Debit to the seller, credit to the buyer ???

Which of the following transactions would qualify as an "arm's length transaction"? Billy has sold his property to his brother for much less than market value. The Millers must sell their home at a reduced price because of an impending divorce. Dennis finally sold his property that has been on the market for a year to a family from Chicago. Darren must sell his home to his business partner at a reduced price because his business just failed and he needs the money now.

Dennis finally sold his property that has been on the market for a year to a family from Chicago.

An agent's duties to a principal include which of the following?

Disclosure or notice

Which of the following is part of a septic system?

Distribution box

Which of the following statements is FALSE regarding earnest money? Earnest money should be placed in an escrow account. Earnest money is required with all contract offers. Earnest money is typically in the form of a check. Personal property can be offered as an earnest deposit.

Earnest money is required with all contract offers.

The following statement regarding earnest money is FALSE: Earnest money is not required for a contract to be valid. Earnest money must be at least 10% of the contract price. The earnest money is deposited in an escrow account if an offer is accepted. A boat could be used as earnest money.

Earnest money must be at least 10% of the contract price.

What does the E&O in E&O insurance stand for?

Errors and omissions

Which of the following is a way of terminating a restrictive covenant? Failure of property owners to enforce the restrictions in a timely manner

Failure of property owners to enforce the restrictions in a timely manner

What is the term for the loss of value of an improvement due to functional inadequacies, often caused by age or poor design?

Functional obsolescence

Seller Gareth is certain there are no clouds on his property's title. What type of deed should he provide buyers to show his assurance of title?

General warranty

What type of properties tend to have the shortest leasing terms?

Hotel rooms

How and when should the seller of a property give a prospective buyer the property condition disclosure?

In writing, as soon as is possible before the transfer of the title.

Broker Jean just opened Purple Mountain Realty. What administrative steps should Jean undertake to help ensure fair housing compliance?

Include a fair housing policy in her policy and procedures manual.

A decrease in the availability of money would have which of the following economic effects?

Interest rates would go up.

How is a rent roll useful to a property manager?

It can help determine the annual rental income for the property.

What is true regarding the platform-frame construction method?

It is the type of construction most generally used in home building.

If the information required to be disclosed is not available to a licensee, what can the licensee do?Provide an approximation of the information and identify the information as approximate. Refuse to supply the required information. Leave the information disclosure form blank and add an addendum that the information was not available. Provide an approximation of the information and identify the information as accurate.

Leave the information disclosure form blank and add an addendum that the information was not available.

Earl was a life tenant who lived in Lilly's property. Earl recently passed away. As a result of his death, Earl's interest will pass to which of the following?

Lilly

If an agency relationship changes during a real estate transaction, what, if anything, should happen?

New disclosure forms must be acknowledged by all parties involved.

Is a licensee exempt from disciplinary actions by the MREC when selling his or her own property?

No, a licensee is not exempt from disciplinary actions by the MREC when selling his or her own property.

Tenant Kelly has the right to use landlord Bob's property according to his lease. Does Kelly have an interest in the property?

No, because Kelly does not own the property.

William just purchased a residential investment property for $225,000. William is 60, married, and will not occupy the property. Will this new property qualify for a homestead exemption?

No, he has to reside on the property to qualify for a homestead exemption.

Aaron is 74 years old and has held a real estate license for 34 years. Is he exempt from the continuing education requirements to renew his license?

No, to be exempt a person must 75 or over AND have held a license for at least 30 years.

If the MREC wish to examine a broker's escrow account records, how much notice is it required to give the broker?

None, the MREC can inspect the records at any time

Congressional Realty advertises all of its listed properties in the Saturday newspaper. What form of advertising is this?

Product

Which of the following is an accepted method of legal description?

Rectangular survey

Hillary earned her temporary license but did not complete the post license course within 12 months and let it lapse. What will Hillary need to do to practice real estate in Mississippi again?

Requalify as an initial candidate (retake prelicense course, exam, etc).

Which of the following rights is included in a fee simple absolute estate?

Right to grant an easement

Katherine wants to begin her Mississippi real estate career. Which Mississippi real estate license will she apply for first?

Salesperson

Salesperson Jonathon joins a brokerage as an independent contractor. Which of the following will he probably have to pay for on his own?

Self-employment tax

Which of the following is an item that is normally prorated at closing?

Taxes

Salesperson Mindy represents seller Isabel. There has been no interest in Isabel's property over the last week. What should Mindy do in regard to the weekly activity report?

Tell Isabel there has been no interest over the last week.

Who regulates Ginnie Mae and Freddie Mac?

The Department of Housing and Urban Development (HUD)

Who is entitled to the commission for transactions earned during a cooperative agreement?

The Mississippi broker.

What significant piece of legislation created the Environmental Protection Agency (EPA)?

The National Environmental Policy Act of 1969

Seller Paul is represented by broker Art. Paul's house was just destroyed by a tornado. Which statement is true?

The agency relationship is involuntarily terminated.

______________ dictate(s) the minimum and maximum pressures allowed for plumbing fixtures.

The building codes

Which of the following best explains the acceleration mortgage clause? The clause that allows the lender to charge points to the borrower. The clause that allows lenders to call the entire balance due and payable immediately if the borrower defaults on the loan. The clause that reverses the amortization of the loan. The clause that changes the mortgage payments from once a month to once every two weeks.

The clause that allows lenders to call the entire balance due and payable immediately if the borrower defaults on the loan.

Homeowner Lorraine has not paid her mortgage for four months. Who will decide when it is time to begin foreclosure proceedings? The Real Estate Commission in Lorraine's state Lorraine The HUD The lender

The lender

There is an escrow money dispute after a transaction failed to close. Who will hold the escrowed funds while the parties are sorting out who is to fault?

The sponsoring broker

What phrase emphasizes the requirement that events related to the contract must be performed on time?

Time is of the essence

Which of the following is not a type of appraisal report? Form report Title report Letter report Narrative Report

Title report

Tyler owns a property within the city limits of a town that is on the Mississippi River. Who owns the land under this navigable river?

Tyler and other owners of properties that abut the river

Homeowner Abraham has a monthly PITI payment of $756. What is not covered by this payment?

Utilities

______________ is a legally-required element of a valid and enforceable real estate contract. A revision date Valuable consideration A backout clause A separate signature page

Valuable consideration

Which of the following is typically a licensee's duty to the brokerage?

Work to promote and sell the broker's listings.

Broker Ola has twice published advertisements that have gotten her in trouble with protected classes. What should Ola do to prevent future advertising problems? Write the ads from the perspective of the largest protected class. Write the ads from the perspective of all protected classes. Hire testers to see what they think of her ads. Purchase additional errors and omissions insurance.

Write the ads from the perspective of all protected classes. ?????

Salesperson Mike works for broker Mark. Mark just had his licensed revoked. Will Mike be able to transfer to another responsible broker?

Yes, Mike will be able to transfer to another responsible broker.

Buyer Tal is regretting the full price offer he just made on a home. Can he still revoke the offer?

Yes, he can revoke an offer even after a seller has accepted it and delivered notice of acceptance.

A homeowner in a residential zone recently built a large warehouse in his backyard. He then rented out the warehouse space to a company to use. This is an example of

a legal nonconforming use.

A will takes effect only after the testator's death. It is a(n) _________, meaning that it can be changed at any time during the maker's lifetime.

amendatory instrument

The Davidsons built a new porch on their property. The porch added $2,000 to the property's market value. This is an example of the ________ principle of value.

contribution

Some taxing bodies recognize that local assessments can lead to unfairly high or low values for properties in certain areas. Therefore the jurisdiction may establish _________ to level out the unevenness of valuations.

equalization factors

If a taxing entity initiates an assessment, the assessment creates a(n)

involuntary tax lien.

Carson had partial ownership of a property. He sold his ownership share for $40,000 and never told the other owners until the closing was complete. Carson was a

joint tenant.

Salesperson Sarah is about to show some buyers a property for the first time. What should Sarah have the sellers do if possible?

leave the property

A(n) ________ is the common form of express written agency agreement between a seller and a broker, authorizing the broker to find a ready, willing and able buyer for the property.

listing agreement

Price changes and listing period extensions are the most common changes made to

listing agreements

Upon the death of a joint tenant, the tenant's interest in the estate

passes to the surviving joint tenants.

In classifying real property by use, government- owned buildings generally qualify as

retail real estate.

The recorded plat method also called _________, is used to describe properties in residential, commercial, and industrial subdivisions.

the lot and block system

Licensee Carol is representing seller Cameron. Carol is currently a

dual agent.

Homeowner Elizabeth sold her house and had net proceeds of $266,000. Her adjusted basis in the home was $235,000. She immediately bought another house for $198,000. What was Elizabeth's capital gain? $31,000 $68,000 $37,000 $34,000

$31,000 $266,000 - $235,000 = $31,000

Retailer Blake owns a commercial store front lot that he wants to sell. The lot is 1/2 acres. The agent informs Blake he can get $15 per square feet for the lot. What total price should Blake list the property for? $326,700

$326,700

A homeowner receives a tax bill that includes an amount for the police district, taxed at $2.50 per $1,000, and the fire protection district, taxed at $1.80 per $1,000. How much does the taxpayer have to pay for these two items if the property's taxable value is $77,000?

$331

A building has 15 apartments generating annual potential rent of $750 each month. Vacancy = 5% and annual expenses are $81,000. What is the NOI?

$47,250 15 x $750 x 12 = $135,000 $135,000 - $6,550(5% vaccancy) - 81,000 = $47,250

A lender is charging 2.75 points on a $275,000 loan. The borrower must therefore pay the lender an advance amount of

$7,563. HOW: 275,000 X 2.75% = 7,562.5 (7,563)

Under the rectangular survey system, one section is equal to

640 acres.

A retail property valued at $710,000 earns $4,650 per month. What is the annual percent of return?

7.9% 4,650 x 12 = 55,800 /710,000 = 7.86% (round 7.9%)

The principal balance of a loan is $360,000. The monthly principal and interest payment will be $2,160 per month for 30 years. How much interest will be paid over the term of the loan? $360,000 $777,600 $288,000 $417,600

777,600 HOW: 2,160 x 12 = 25,920 x 30 = 777,600

An Adjustable Rate Mortgage (ARM) contains a(n) ________ that allows the interest to adjust over the loan term.

escalator clause

A written contract to sell timber rights is performed by both parties. Six months later, the seller has second thoughts and wants to reclaim the rights under Regulation Z. What is the likelihood that the seller will succeed? Slight, if the seller fells like he was taken advantage of. Good, because Regulation Z requires the contract be in writing. Nonexistent, since this contract has nothing to do with a violation or, or compliance with, Regulation Z. Excellent, because landowners are not allowed to sell timber rights under Regulation Z.

Nonexistent, since this contract has nothing to do with a violation or, or compliance with, Regulation Z. ?????????

Which of the following best describes title insurance?

Protection to an owner of property against losses sustained as a result of a defective title to real estate.

Which of the following will terminate a contract? A contract cannot be terminated. The agreed to the amendment of a contract Assignment of the contract Abandonment of the contract

The agreed to the amendment of a contract

Mayor Rodney is unsure how ad valorem real estate taxes are calculated for a particular property. What is the best answer? The appraised value of the property multiplied times the area's millage rate. The appraised value of the property divided by the area's millage rate. The assessed value of the property divided by the area's millage rate. The taxable value of the property multiplied by the area's millage rate.

The assessed value of the property divided by the area's millage rate.

Benny manages a Class D office building. Which of the following best describes a Class D office building? The building is new and demands the highest rents around. The building is old, in a poor location, and is poorly maintained. The building is older but is well-maintained and respected. The building used to be zoned commercial but has been rezoned either industrial or residential.

The building is old, in a poor location, and is poorly maintained.

Which of the following best describes a breach of contract?

The failure of a party to perform according to the terms of the contract

How does a reverse annuity mortgage work?

The homeowner receives monthly payments based on accumulated equity.

Soho Ranch is a newly incorporated town. Who will be responsible for the site plans, subdivision plans, and zoning of Soho Ranch?

The planning commission

Which of the following is an advantage to purchasing a commercial property compared to a residential property?

The vacancy rate is higher than residential properties. ???????

In a(n) _____, an owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum. open listing net listing closed listing return listing

net listing

Buyer Yancy offered $6,750 in earnest money with an offer that was accepted. Both Yancy and the seller want the escrow account to be interest bearing. Will this be allowed? Yes, escrow accounts can be interest bearing if both parties agree. Yes, escrow accounts can be interest bearing if the escrow amount is over $5,000. No, escrow accounts cannot be interest bearing unless the escrow amount is over $10,000. No, escrow accounts can never be interest bearing.

Yes, escrow accounts can be interest bearing if both parties agree.

Terrell is hosting a one-time sporting event on his property. Every person who buys a ticket has essentially

bought a license that allows them to be on Terrell's property during the sporting event.

Before someone can move into a new home, a building inspector must see if the structure complies with building codes. If the home does, the municipality or county will issue a certificate of occupancy. certificate of habitability. certificate of clean title. certificate of safety.

certificate of occupancy.

Real estate salespeople are called upon to provide comparable sales to a seller who wants to list a property for sale. This is called a licensee appraisal of value (LAV). assessed value analysis (AVA). listing price projection (LPP). competitive market analysis (CMA).

competitive market analysis (CMA).

A licensee is required to continue to provide _____________ even after the agency agreement has been terminated.

confidentiality