LTP National
A suggested sale price derived from a Comparative (or Competitive) Market Analysis is determined by observing the actions of buyers and seller in an open market. The economic principal that describes this is known as the:
Economic Principal of Substitution - states that buyers will only pay price that is dictated by similar transactions and no more given a fair and open market
Which of the following could be taken into consideration when appraisers use the cost approach of valuation?
Economic obsolescence - refers to events surrounding property which depreciate its value. Examples include new roads changing traffic patterns or rezoning Adjustments are used in sales comparison approach Gross Rent Multipliers are associated with the direct income capitalization approach Transferability refers to one of the four characteristics of value
Which of the following best describes the formula for determining net operating income?
Effective Gross Income - Expenses Effective Gross Income (Total Anticipated Revenue) = Gross income - vacancy & collection Net Operating Income = Effective Gross Income - Operating Expenses Before Tax Cash Flow = Net Operating Income - Debt Service
According to the North Carolina Property Disclosure Act, agents would be responsible for which of the following?
Informing buyers and seller of their rights and responsibilities under the act
A listing agent obtains 4 offers on a brand new listing, all equal to or better than the asking price. The seller instructs the agent to create a spreadsheet to provide to the offering buyers to inform the buyers of the terms of the other offers. What should the listing agent do in this circumstance?
Instruct the seller that agents are prevented by Commission rule from disclosing the terms of competing offers
An agent listed a property and before he/she can put it in the MLS the seller dies. What is the status of the listing?
It is terminated and you should stop all work on the listing
Which of the following terms, used in the advertisement for a rental property, would be a violation of the Federal Fair Housing Act?
Landlord seeking professional couple for 2-year lease on upscale, downtown, loft condo. Great views from the 9th story unit Federal Fair Housing Laws do not apply to commercial space
A developer requires all builders within the subdivision to build a certain standard and no home may be built smaller than 4,000 square feet. The developers requirement is knows as what? And how will the developer enforce this requirement?
Private deed restriction with enforcement through court of law Restrictive covenants are private restrictions on land use. Private restrictions are enforced through a complaint to the homeowners association or through court action (injunction)
The subject property has 3 bedrooms, 2 bathrooms, and 1,825 sq ft. The comparable property has 3 bedrooms, 2 bathrooms, and 1,900 sq ft. Using principles of the sales comparison approach, how would an adjustment for square footage be made?
Subtract the difference in value from the comparable property Since comparable has more sq ft than subject, comparable is considered better and subtraction to comparable's sold price must be made *never adjust the subject property*
Tina, Mike, and Joey purchased a piece of property on the same day. Their ownership shares are equal and they have undivided possession. Further, they acquire the property at the same time. This type of ownership is best described as:
Tenants in Common Tenancy in common is default type of ownership for unmarried persons who acquire property together. Note: question gives all unities of joint tenancy but does not state right of survivorship.
A salesperson lists a property for sale. The seller enters into a legally binding contract. The salesperson receives the earnest money check from the buyer's broker. The salesperson:
must deliver the earnest money deposit to his broker A salesperson must deliver the earnest money deposit (EMD) collected to his/her broker so that the broker may deposit it into the trust/escrow account within the required time period. Client funds can never be deposited into a personal account
Which of the following formulas is associated with value using the income approach?
net operating income divided by capitalization rate equals value
Which of the following formulas is associated with value, using the income approach?
net operating income divided by capitalization rate equals value
Which of the following is an example of a listing contract a licensee could use to establish agency with a seller?
open 3 types of listing agreements are Open, Exclusive Agency, and Exclusive Right to Sell
Which of the following is one of the five rights associated with the bundle of rights in property ownership
possession, control, exclusion, enjoyment, disposition
A naturally occurring gas that can seep into homes or building and can cause cancer is known as:
radon odorless, colorless, can only be determined by testing
A seller is refusing to pay a broker the commission outlined in a legally binding listing agreement. The broker:
should allow the closing and then sue the seller for compensation
Of the main classification of agency, which one describes the role usually filled by a real estate broker?
special agency
All of the following would be included in the "bundle of rights" regarding real property, EXCEPT:
the ability to take the property of another "DEEP C" Disposition, Exclusion, Enjoyment, Possession and Control
The term equity can best be described as:
the difference between the current market value and total amount owed on all outstanding liens on the property
A salesperson lists a property under a limited-service agreement. A buyer that is represented by another firm makes a full price offer on the property. The seller after reviewing the offer, decides not to sell and asks the listing salesperson to terminate the listing. In this situation:
the seller has the right to refuse the offer but may not have the right to terminate the listing contract The seller is not obligated to accept an offer, even if it meets all of the terms that the seller has requested. The listing broker would be entitled to compensation in this circumstance. The seller may request to terminate the listing, but that can only be accomplished by mutual agreement.
Under federal law, a property subject to the 1992 Lead Based Paint Hazard Reduction Act requires:
the seller to grant the buyer a 10-day inspection period
A neighborhood is subject to restrictive covenants. The HOE has not enforced the covenants for over 3 years. The HOA can no long enforce the covenants:
through laches - loss of right to enforce covenants
An optionor gave an option to purchase a 3,218 sq ft home on 4 acres over the next 5 years in exchange for the Optionee paying a $7,545 non-refundable option fee. This describes which type of contract?
unilateral - contract has two parties, but only one party exchanged a promise in return for an action (For example: A neighbor posts a sign offering a $1,000 reward to find Fido. You are not obligated to search for Fido, but if you find the dog and return him, your neighbor is required to pay you the $1,000) bilateral - contract has two parties who both exchanged promises to the other executory contract - refers to the point in time when both parties are under contract but have not yet completed their promises executed contract - contract that is complete or recorded
An investor purchases a property with a 20% down payment by obtaining a 80% LTV mortgage. This is an example of:
using leverage
A local real estate company provides limited listing services. For $500 the firm will put a seller's listing in the MLS and provide them with a sign. The seller will be responsible for negotiating their own contracts and scheduling showings. In this case, the limited listing service company:
would be excused from additional services outside their contractual agreement with the seller, but not their fiduciary duties to the seller
Which of the following would be a type of involuntary alienation during the life of a property owner?
*Eminent Domain - government takes private property for public use with compensation Escheat - involuntary alienation but occurs after one is deceased Transfer by will - voluntary alienation that occurs at death Consummation of contract - voluntary sale or granting of a property
A seller lacks the funds to complete a sale without obtaining lender approval. The listing broker should ensure that the listing agreement includes a:
*short sale addendum - when seller owes more money than the home is worth and lacks funds, disclose as material fact back-up contract addendum - used in purchase contracts when property is already under contract
Which of the following borrowers would most likely be afforded the protections of the equal credit opportunity Act?
A borrower who is refused a mortgage loan because all of his/her income is derived through public assistance programs ECOA protects against discrimination based on race, color, religion, sex, national origin and handicap. Also protects against discrimination based on age, marital status and source of income (public assistance)
Which of the following best describes an escrow closing process?
A closing agent makes separate appointments for the buyer and seller to individually sign their side of the documents needed for closing
A legal nonconforming use is best described in which of the following?
A local inn predating the town is in an area which has always been zoned residential only since the town's master map was created
An agent's ad stated, "3-bedroom, 3-bath townhouse available. 1st floor unit in a quiet building where there are no children. Wheelchair accessible. Minimum credit score of 660 required; former felons need not apply." Which of the following is true?
A prohibition against children in a specific building in the complex is a violation of the Federal Fair Housing Act
Which of the following is correct regarding Do-Not-Call laws?
A real estate agent may contact a consumer they have a business relationship with for up to 18 months after the consumer's last purchase, even if the consumer is on the do-not-call list A broker cannot call a seller listed on the Do Not Call Registry to solicit the listing unless they have a prior business relationship in the past 18 months. The Do Not Call Registry must be checked every 31 days, and a broker can call a party that has made an inquiry for 3 months.
An agent, with a large real estate office, lists a property for sale. The agent informs his office that the seller of the property is in poor health and will sell for much lower than the list price if he can close quickly.
All agents in the office should keep this information quiet unless the seller allows for its distribution
When a buyer and seller believe there is a breach of contract which party decides whether the contract may be deemed enforceable?
Court of law
Which of the following reasons would lead to the termination of an agency agreement?
Death of company
An agency relationship between a listing agent and a seller could be terminated by which of the following?
Death of the seller Agency is terminated by mutual agreement between the firm and client, death of the firm or client, expiration of the relationship, successful closing of a transaction, and outside influences such as destruction of property and eminent domain
For the transfer of a deed to be valid, which of the following must occur?
Deed must be signed by the grantor (seller)
When someone die testate it means they left a valid will. If the deceased left real property to his/her heirs using a will, the term used to describe this is which of the following?
Devise Bequest - leaving personal property to another in a will Legacy - refer to a devise or bequest Descent - laws in each state how property should pass when the decent had no will or died intestate
Which of the following duties does a listing agent owe to the buyer?
Disclosure of a scheduled road project that will affect the property
All of the following are true regarding VA and FHA loans EXCEPT?
FHA mortgages made by FHA approved lenders are not subject to RESPA FHA 203b loans are most often used FHA loans - require at least 3.5% down / 96.5% LTV Discount points may be charged on FHA loans and these discount points increase the lender's yield. Any FHA 203b loan cannot contain a prepayment penalty. VA allows 100% LTV loans
When determining the value of a commercial property using the cost approach, an appraiser deducted from the property's value because the wiring in the building was outdated compared to more contemporary buildings. This deduction is an example of which of the following?
Functional Obsolescence - deducting value due to outdated nature (floor plan, wiring, etc.) of building Physical deterioration is the effect of normal wear and tear External and economic obsolescence occur where circumstances have changed beyond owners ability to control (closed highway, closed factories nearby)
Under the law of agency, when an agent is given a broad range of powers in an ongoing relationship, where actions are limited to certain defined tasks, is known as what type of agent?
General agent
Special hazard insurance covers structures, improvements, and personal property while meeting most lenders requirement for minimum coverage. This type of insurance policy is referred to as an all-risk policy and may be referred to as:
HO-3 Policy HO-4 is a tenant or renter policy HO-5 covers real, personal property and provides liability coverage as well as medical payments HO-6 is a condo owner policy
Which party MOST likely has the authority to levy special assessment fees against a property?
HOA board
Which of the following is true regarding the transfer of title to real property?
In a Contract for Deed, the seller provides seller financing and conveys legal title when the note is paid in full In a Contract for Deed, otherwise known as an Installment Contract, the seller finances the purchase but holds the title until he is paid Another type of seller financing is the purchase money mortgage, where seller delivers title but puts a lien on the property in the event of default
A seller would like to list his property with an agent but would like to reserve the right to sell the property himself without being obligated to pay a commission. This is best described as a(n):
exclusive agency
The seller of a property removes the fridge and stove prior to the settlement meeting. No mention of either item is made in the offer to purchase and contact. The stove and fridge were not "built-in" or secured to the property. Is the seller liable to the buyer to replace these items?
No. The fridge and stove should have been specifically addressed in the contract if the buyer wanted them to remain
Which of the following is true regarding an Option to Purchase?
Option Contracts are "time is of the essence" regarding the option date
All of the following are examples of bilateral contracts, EXCEPT:
Option to Purchase Examples include: Exclusive Right to Sale Listing Agreement, Offer to Purchase and Contract, and Contract for Deed An option agreement is a contract where the optionee (buyer) can decide to "opt-in" to the contract. It is unilateral until the option has been exercised, at which it becomes a bilateral contract
Which of the following statements regarding environmental concerns is TRUE?
Polychlorinated biphenyls are associated with electrical equipment and are a known carcinogen
Property is owned by 4 Joint Tenants - Robin, Nancy, Russell and Jed. Robin sells her share to Jane. A few years later Russell dies. What is the ownership status in the property?
Russell's shares of the property will pass to Nancy and Jed A joint tenant may sell his/her share without the permission of the other co-owners. The new owner will be a tenant-in-common. The sale does not change the status of the remaining joint tenant. When a joint tenant dies his/her share automatically transfers to the surviving joint tenants. Joint tenancy has a right of survivorship which makes it not inheritable. A will cannot defeat joint tenancy. NOTE: You don't pass a joint to your kids.
Sally is a sub-agent of the seller. She is working with a buyer customer. The buyer tells Sally that she will pay full price for the house. Which of the following is correct?
Sally must tell the seller what the buyer is willing to offer Since Sally is a seller sub-agent, anything that she learns about the buyer must be passed on to the client. Since she is sub-agent of the seller there is not buyer agency agreement
An agent knows that there is a possible zoning change. The agent refuses to answer the buyer's question regarding any possible zoning changes because the buyer is unrepresented. In this case:
The agent has acted improperly as the possible zoning change is a material fact, therefore the agent has committed willful omission
All of the following may result in a real estate sales contract being terminated, EXCEPT:
The buyer's is unable to obtain a specific loan
A first-time homebuyer and a builder enter into a contract. The agreement is for the Birmingham plan to be built on lot 43. Through a series of mistakes, the builder builds Buckingham plan on lot 43. Which of the following would be correct regarding this situation?
The contract could be rescinded by either buyer or seller based on the legal concept of a mutual mistake Neither party appears to be intentionally cheating the other party; an honest mistake appears to be the cause of problem. Seller would not be required to tear down the house that was started, nor would the buyer be compelled to purchase incorrect floor plan. Cannot transfer contract to another lot as the mutual consent was on lot 43
Automatic termination of a buyer agency agreement will be caused by which of the following actions?
The death of the buyer
Truth in Lending laws would apply to the financing of which of the following properties?
The financing of a single-family home where the loan is secured by the residence
All of the following statements are TRUE about the lending process, EXCEPT:
The lender may be referred to as the obligor, mortgagor, or promisor Lender gets the "ees" and borrower has "ors"
Which of the following statements regarding TRID is TRUE?
The lender must provide the Closing Disclosure at least 3 business days prior to the date of settlement, when delivered electronically Loan Estimate must be provided within 3 business days from mortgage application Closing Disclosure must be provided at least 3 business days prior to the date of settlement
A seller was so excited to finally receive an acceptable offer on his house that he celebrated to intoxication with champagne before e-signing the Offer to Purchase and Contract. As a result, the contract could be considered:
Voidable
A listing agent presented an offer to their seller client. The offer was low and the seller requested time to think about it. The next morning, the agent called the seller to notify him that another offer would be coming within the next week. The seller told his agent to notify the buyer who had made the low offer that the seller was rejecting the offer. In this case, which of the following is a correct statement regarding the listing agent's actions?
The listing agent fulfilled their fiduciary duties because even though the second offer had not been received the agent was obligated to notify the seller of the possibility of the second offer.
A buyer is financing the purchase of her property must pay for both a borrower title insurance policy and a lender title insurance policy. The lender title insurance policy offers protection up to what amount?
The loan balance outstanding
Which of the following statements about title insurance is CORRECT?
The mortgagee policy will end when the loan has been paid in full The mortgagee is the lender (lender has ee's, so they are the mortgagee). The lender policy will cover the outstanding loan balance, so upon final payment of the debt, the lender policy will end. Title insurance covers losses that were not known at the time of closing that relate to past events
A property owner has requested that the setback lines of his property be moved so that the site better accommodates the home he wishes to build. Which of the following would best describe his situation?
The owner may or may not be granted a variance May be approved or denied by the Board of Adjustments or Zoning Board
A real estate agent would be required to disclose which of the following?
The presence of an on-site septic system
Which of the following would not be included in a basic definition of real property?
The refrigerator in the kitchen Rights and privileges that "run with the land" are appurtenances and considered real property Land A split rail fence is real property because seemingly permanent nature as barrier
Rent escalator clause can best be described as:
The right of the landlord to increase or decrease rent at set intervals
A seller entered into an Exclusive Right to Sell Listing Agreement. A qualified buyer presented an offer for the listed price. The seller refused to sell to the buyer. Which of the following is a correct statement?
The seller can refuse to sell, but a commission is owed to the broker
Which scenario best describes a seller exempt from paying compensation under an exclusive agency listing agreement?
The seller procures the buyer exclusive agency listing - sellers do not pay comp if the sellers find buyer exclusive right to sell listing - sellers always pay comp regardless of how buyer is procured open listing - sellers only pay comp if listing firm finds the buyer
Which of the following statements regarding personal-use easements is FALSE?
There is both a dominant and servant tenement. With personal-use easement or commercial use easement there is only a servient tenement
An agent would be responsible for which of the following in regards to land use controls?
Verifying and disclosing the existence of restrictive covenants
Why is asbestos an environmental concern?
When friable it throws dust particles into the air which cause lung disease
Four people own a parcel as Joint Tenants with survivorship and each holds a 25% interest. Their names are Fed, Wilma, Barney, and Betty. Fred dies. Who owns Fred's interest?
Wilma, Barney, and Betty
A broker is affiliated with XYZ Realty and writes an offer on behalf of a buyer for a property listing with ABC Realty. XYZ Realty earned compensation when the property went under contract. The listing broker should pay compensation to:
XYZ Realty as they are the selling brokerage Compensation is paid to the brokerage. The listing brokerage ABC Realty will pay the amount earned by the selling brokerage to XYZ Realty. Compensation is not paid directly to salespeople or brokers when a client is represented by a brokerage / firm.
After refusing to enter into buyer agency and subsequently working with a seller's subagent on a property, the buyer decides it is better to have agency representation. The buyer asks the subagent to be his buyer's agent moving forward. Is this possible?
Yes, but the subagent must first receive permission from the seller to enter into buyer agency and the subagent must also notify the seller that any and all confidential information learned about the seller will be disclosed to the buyer, too
A firm is acting as subagent to the seller in a transaction. An agent of the firm showed the property to a buyer that disclosed they would pay more than the list price of the home. The agent of the firm did not disclose this information to the seller. Has the agent violated his fiduciary responsibility to the seller?
Yes. The agent has a duty to disclose the information to the seller as he is acting as subagent to the seller Subagent to seller all fiduciary duties are owed to the seller. Firm agents must disclose info about buyer even if it weakens the buyer's bargaining position
A buyer purchases a share of stock and enters into a lease. This is an example of:
a co-op When a buyer purchases a co-op, they do not directly own the unit itself. They purchase a share of stock and enter into a proprietary lease. A leased fee interest is the interest of the owner when they rent out the property and the tenant has a leasehold interest. When a buyer purchases a condo, they own the airspace of the unit itself as well as co-ownership of the common areas. When a buyer purchases a townhouse, they own the unit itself as well as the land that it rests upon. The common areas are owned by the HOA. NOTE: With both townhouse and condo ownership there can be limited common elements such as storage, parking or a garage.
A limited warranty deed is:
a deed that warrants the grantor will defend against claims that arise from his/her time of ownership A limited or special warranty deed limits the promises or covenants that a grantor makes to the period of time that they owned the property
To be compliant with CAN-SPAM laws, all marketing emails must contain which of the following?
a physical business address
What duty does a principal owe to the agent?
act in good faith cooperation, payment when earned, and otherwise acting in good faith
When "time is of the essence" is included in a contract, its best definition could best be described as:
acts must be performed on or before that date
Federal antitrust laws prevent salespeople and brokers from collectively restricting consumer choice. The goal is to avoid creating a monopoly. Examples of prohibited activities under antitrust laws include which of the following?
allocation of markets - only anti-trust option Steering - prohibited in fair housing laws False/inflated appraisals are prohibited in lending to avoid loan fraud Undisclosed dual agency is prohibited in agency laws and by license law and commission rules
A loan that would allow as little as 3.5% down payment in the purchase of a 1-3 unit owner-occupied property is best known as:
an FHA 203b loan FHA loan requires as little as 3.5% down towards the purchase of a property VA and USDA loans can be obtained for as little as 0% down Conventional loans require 20% down to avoid paying private mortgage insurance
To make modifications to a contract, an agent would use:
an amendment
Property taxes are generally calculated:
based on the assessed value of the property Tax values can change each year, however must change every 8 years in NC
A buyer gives his real estate agent criteria for the home that he is interested in, including school district, price range and square footage. The agent searches the available properties and removes homes from the list he feels are in neighborhoods with dramatically different racial makeups than his buyer's. This is an example of:
channeling or steering - directs or channels a buyer away from an area Blockbusting or panic peddling - used to induce an owner to sell his/her property Redlining - illegal lending where a bank will not make loans to area based on protected classes
When lenders determine the amount of loan they are willing to provide, they must consider the property's value compared to how much loan a borrower is seeking. Which determines the property's value?
contract price or appraised value, whichever is lower
What legal right does a lender have in a short sale situation?
deny the sale of the property
When someone dies testate it means they left a valid will. If the deceased left real property to his/her heirs using a will, the term used to describe this is:
devise bequest - leaving personal property in will descent - how property should pass when decedent had no will or died intestate
An agent pursues FSBO leads in a manner compliant with all applicable solicitation laws. One FSBO is seriously considering hiring this broker but also does not want to throw away all of her previous hard work. There are a few buyers she found that might come back and make an offer. The seller doesn't want the agent to make money off her old efforts. The agent understands and most likely proposed using which of the following listing contracts?
exclusive agency - if the seller procure a buyer then the seller does not have to pay the listing firm Open listing - seller could hire as many firms as desired an only the listing firm which finds the buyer will receive payment Exclusive right to sell - listing firm is paid no matter what Net listing - listing firms receiving comp based on any money remaining after seller's other debts and obligations are paid
A contract that has been fulfilled is known as a(n):
executed contract
When a seller and buyer are under contract to convey real property, the contract is best described as:
executory
A tenant has failed to make the rental payment by the due date. The property manager has issued a 10-day notice to pay or quit. In the event that the tenant does not pay the bill, the property manager should:
file for summary ejectment
A seller hired a listing firm to market his home for a quick sale. The firm agreed to accept $10,000 in payment no matter what. This form of compensation is best described as?
flat fee
A broker is working for a buyer under an oral buyer agency agreement. The listing agent discloses information that weakens the seller's bargaining position. The buyer's agent:
has a duty to disclose the information
A buyer and a seller each believe the other has breached the offer to purchase and contract. Which of the following could be a remedy available for breach?
liquidated damages
A seller told his listing agent the 20-year old water heater leaked from time to time. The listing agent made a note of this. Ten days later, a very interested buyer with a buyer's agent inquired if any updates or replacements were made in the house. The listing agent replied no. The buyer's agent recommended a home inspection; however the buyer declined. The buyer and seller subsequently went under contract. After closing, the buyer realized the water heater leaks from time to time. By law and rules, which of the following party/parties is/are responsible for this omission?
listing agent willful omitted the water heater leaks from time to time
A listing agent is aware that the heating system is not working correctly. The listed property is on the market in July so this defect will likely not arise since the buyer has waived his right for a home inspection. The listing agent informs the buyer that "all systems are functioning as intended." The agent could be guilty of:
misrepresentation willful misrepresentation - knew about defect but disclosed that systems were working correctly, but weren't