practice exam 4

*Each unit in a 20-unit apartment complex rents for $375.00 per month. *Vacancy and collection losses = 6% *Fixed expenses = $21,200 *Variable expenses = $24,300 *Reserves for replacements = $9,100 *Annual debt service = $18,000 What is the debt service coverage ratio? Select one:

a. 2.84 b. 1.67 Correct c. 2.17 d. 3.02 Feedback The correct answer is: 1.67

A year for banking, real estate, or escrow purposes contains: Select one:

a. 360 days b. 364 days c. 365 days d. 365 days except in leap years when it has 366 days Incorrect Feedback Your answer is incorrect. Prorating Calculations

What is the required housing expense ratio for a conventional loan? Select one:

a. 43% b. 36% c. 31% d. 28% Correct Feedback The correct answer is: 28%

The title search will list all of the existing liens on the property that is to be paid off at closing on a Title Binder, and it will list any encroachments known by the title company. A title company specializes in examining and insuring titles to real estate.

A title company makes sure that the title to a piece of real estate is legitimate and then issues optional Title Insurance for that property. The title company will review previous ownership records of a property through Chain of Title and an Abstract of Title and execute a Title Opinion in regards to the marketability of the title - the ability of the owner to transfer the property to the buyer. Title companies also often maintain escrow accounts — these contain the funds needed to close on the home — to ensure that this money is used only for settlement and closing costs, and may conduct the formal closing on the home. At the closing, a settlement agent from the title company will bring all the necessary documentation, explain it to the parties, collect closing costs, and distribute monies. Finally, the title company will ensure that the new titles, deeds, and other documents are filed with the appropriate entities. The correct answer is: Escrow accounts

Alice purchased a home from Bob. Alice acquired a new loan from Friendly Bank for $75,000. Which of the following is the appropriate entry on the closing statement?

Select one: a. $75,000 credit to Alice and $75,000 debit to Bob b. $75,000 debit to Alice only c. $75,000 debit to Alice and $75,000 credit to Bob Incorrect d. $75,000 credit to Alice only Feedback The correct answer is: $75,000 credit to Alice only

What are the post licenses requirements for a broker associate?

Select one: a. 14 hour of continuing education b. 45 hours of post license education c. 60 hours of post license education Correct d. 14 hours of continuing education plus 45 hours of post license education Feedback The correct answer is: 60 hours of post license education

All of the following are residential property as defined by Florida law EXCEPT:

Select one: a. A five-unit apartment house. Correct b. Undeveloped agricultural land of 10 acres or fewer. c. A single-family home. d. A condominium unit. Feedback The correct answer is: A five-unit apartment house.

Title companies also often maintain:

Select one: a. A savings account b. Escrow accounts Correct c. Both a and b d. Neither a nor b Feedback Your answer is correct. Release of Existing Liens and Encroachments

Question text How is rent calculated and detailed on a closing disclosure?

Select one: a. Buyer will be debited the prorated sum of rent, to be paid to the seller. b. Seller will be credited the cost of rent for the time period they still own the property. c. Buyer will receive a credit to cover the time period they own the property, debited from the seller. d. a and b but not c Incorrect Feedback

PUDs (Planned Unit Developments) are different from condominiums in that:

Select one: a. Condominiums are owned by individuals; PUDs are owned by corporations. Incorrect b. PUDS have tenant in common ownership with the other owners of common ground; condominiums have a joint tenancy ownership. c. PUDs have common ground; condomiums do not have common ground. d. PUDs are governed by a corporation; condominiums are governed by a homeowner's association. Feedback The correct answer is: PUDs are governed by a corporation; condominiums are governed by a homeowner's association.

How many hours of post license education, is a broker required to complete? Select one:

a. 14 hours b. 28 hours c. 60 hours Correct d. 72 hours Feedback Your answer is correct. It is also a requirement of Florida state, that all brokers, and broker associates continue their real estate license education, by taking the mandatory 60 hour post license broker course. The education requirement consists of two, 30 hour courses, equaling 60 hours of education, that covers real estate investment, and real estate brokerage management. Both courses must be completed by each licensed broker, or broker associate, before their first initial license renewal, which would be either on March 31st, or September 30th, as explained previously, 2 years after the date of their initial license. Florida state sets this education requirement, as working as a real estate professional, means the individual is required to possess a large amount of knowledge pertaining to the industry, which is demanding for the individual to learn, on their first 72 hour pre-license broker course, in all its entirety The correct answer is: 60 hours

In what time frame are lenders required to issue an applicant with a loan estimate? Select one:

a. within three days of a home loan application or seven days prior to closing Correct b. within five days of a home loan application or 14 days prior to closing c. within 7 days of a home loan application d. 10 days prior to closing Feedback Session 13 - Parts of the Closing Disclosure - Page The Good Faith Estimate and the Truth in Lending disclosure have been replaced by the Loan Estimate. It's really not an "estimate" any longer, because lenders will be held accountable to the exact charges listed on this form, and the loan charges listed must come within 10 percent of the actual costs. The estimate must be given within three days after six items of information are collected: the consumer's name, income, social security number, property address, estimated property value, and the loan amount. Lenders are required to issue the loan estimate within three days of a home loan application or seven days prior to closing. If a loan originator does not provide a loan estimate within three business days of receiving a completed loan application, that lender is in violation. The correct answer is: within three days of a home loan application or seven days prior to closing

The net income of a rental property is $15,000, and the overall cap rate is 12%. What is the value of the property? Select one:

a. $100,000 b. $112,000 c. $117,500 d. $125,000 Correct Feedback The correct answer is: $125,000

An apartment house was purchased for a contract price of $400,000. The buyer spends $3,500 for an appraisal, $2,000 for a special survey, and $1,500 in attorney's fees. The land was appraised for market value of $80,000. The depreciable basis is: Select one:

a. $320,000 Incorrect b. $327,000 c. $400,000 d. $407,000 Feedback When a home is purchased initially, the original purchase price is called the basis. The homeowner is allowed to add certain expenses to the basis. These are settlement costs such as abstract fees, charges for installing utility services, legal fees for title search and preparation of the deed, recording fees, survey fees, transfer taxes, owner's title insurance. Any charges in connection with getting a mortgage loan cannot be included. The correct answer is: $327,000

A $130,000 mortgage @ 6% interest is being assumed as of October 15th. If the day of closing belonging to the buyer and the interest is paid in arrears, how is the interest to be pro-rated? Select one:

a. $405.33 credit to buyer, $354.67 debit to seller b. $299.18 debit to seller, $299.18 credit to buyer c. $354.67 credit to buyer, $354.67 debit to seller d. $354.67 credit to seller, $405.33 debit to buyer Incorrect Feedback Since mortgage interest is paid in arrears, the seller will credit buyer for the 14 days of October. Yearly mortgage interest = 130,000 x 6% = $7,800 Daily mortgage interest = 7,800 / 365 = $21,37 The seller will credit buyer 14 days = 21.37 x 14 = $299.18 The correct answer is: $299.18 debit to seller, $299.18 credit to buyer

A rental house has been sold with the day of closing scheduled for May 12th. Total rent collected on the first is $760. If the day of closing belong to the buyer, how will the rent pro-ration be handled? Select one:

a. $490.32 debit to seller, $490.32 credit to buyer b. $269.68 debit to seller, $490.32 credit to buyer Incorrect c. $490.32 credit to seller, $490.32 debit to buyer d. $269.68 credit to seller, $269.68 debit to buyer Feedback There are 31 days in the month of May. Seller collected full month rent $760 on the first. Since the house sold on the 12th which is a buyer day, so the seller will have to credit buyer from the 12th to 31st which is 20 days. Daily rate = 760 / 31 = $24.52 Seller will credit buyer 20 days = 24.52 x 20 = $490.32 The correct answer is: $490.32 debit to seller, $490.32 credit to buyer

Becky is the manager for a large apartment complex in Miami. Steve is a tenant whose lease has expired. Steve has remained in the unit paying rent on a month-to- month basis. What notice is required to terminate the tenancy? Select one:

a. 15 days Correct b. 20 days c. 30 days d. 45 days Feedback The correct answer is: 15 days

What is the maximum number of members in a Real Estate Investment Trust (REIT)? Select one:

a. 75 b. 100 Correct c. 150 d. 200 Feedback The correct answer is: 100

Which of the following statements is FALSE: Select one:

a. A Proration is an item that is shared between the buyer and seller. b. A Credit is an item (amount of money) that is being paid to the party receiving the credit. c. A Debit is an item (amount of money) that is charged to a party. d. Expenses are always debited items to the buyer and broker. Correct Feedback Your answer is correct. Principles of Prorating Many purchase contracts used in real estate contain provisions for prorations between sellers and buyers. Before signing a purchase contract, you should read it to find out how prorations are handled, because you might want to propose a change in the verbiage about prorations. In most cases, but not all, buyers are charged for prorations. Charges show up as a debit on the buyer's closing statement and as a credit on the seller's closing statement. The credits increase the seller's net profits and reimburse the seller for items the seller has prepaid for the time period the seller will not own the property. The correct answer is: Expenses are always debited items to the buyer and broker.

Reconciliation is best described as: Select one:

a. A broker uses the houses most similar to do a CMA. b. An appraiser analyzing results obtained from data to arrive at a market value. c. An appraiser selecting the highest use a property can have to get value. d. A broker comparing like properties and averaging the results to get a market value. Incorrect Feedback The correct answer is: An appraiser analyzing results obtained from data to arrive at a market value.

The closing agent prepares an accounting for both parties called: Select one:

a. A closing b. A settlement statement Incorrect c. both a and b d. neither a nor b

The term "going concern" means: Select one:

a. A great restaurant business. b. A great piece of real estate property. c. A tall building. d. An existing business that is for sale. Correct Feedback The correct answer is: An existing business that is for sale.

Which of the following is not a step in the sales-comparison approach? Select one:

a. Adjustment process b. Measure the amount of accrued depreciation c. Data collection Incorrect d. Reconciliation Feedback The correct answer is: Measure the amount of accrued depreciation

County and state taxes are paid in: Select one:

a. Advance Incorrect b. Monthly Amounts c. Both a and b d. Neither a nor b Feedback Your answer is incorrect. Property Taxes County and state taxes are paid behind or in arrears. That means that a tax bill will come that the seller owes after he has passed to property on the buyer. So, the buyer will end up having to pay the tax bill. To make this equitable, the seller must pay his portion of the tax bill at closing. It will be entered as a credit to the buyer and debit to the seller. Prorations exist because taxes and utility costs do not stop just because the property changes hands. In the case of prorations, either the seller owes the buyer for services he has used but not paid for, or the buyer owes the seller for services the seller has already paid for but not yet received. In Florida, it is customary to have everything prorated as of midnight the night before closing. The buyer is charged with taxes on the day of closing. A 365-day method is usually used. The correct answer is: Neither a nor b

________is the search through recorded documents to find evidence of title transfer history and mortgages or other liens against the property. Select one:

a. An Abstract of Title b. A Chain of Title c. Inking d. A title search Incorrect Feedback Your answer is incorrect. A Chain of Title An Abstract of Title is the search through recorded documents to find evidence of title transfer history and mortgages or other liens against the property, including judgments and unpaid taxes. The correct answer is: An Abstract of Title

If an employee of an electric company is buying, selling and negotiating property transactions on behalf of his employer, which of the following statements is correct? Select one:

a. As it is not his own property, he does not require a license. b. He qualifies for licensure exemption, as he is the employee of an electric company. Correct c. As he is negotiating property transactions, he will require a license. d. As he is buying and selling property on behalf of others he will require a license. Feedback Your answer is correct. "There are however some exemptions that are permitted in state statute, which allows a person to carry out certain activities in relation to real estate, without being permitted to hold a real estate license. If a person receives an hourly wage, or salary, for performing real estate services, where no additional compensation is due, if the property is sold or leased, exemption of licensure would apply. Individuals who are also exempt from licensure, include the following; An employee of a railroad, public utility organization, or state or government agency, that carries out services for a regular salary, and not for commission based on sales." The correct answer is: He qualifies for licensure exemption, as he is the employee of an electric company.

With an adjustable-mortgage loan (AML), the interest rate: Select one:

a. Automatically increases every six months b. Is based upon the average in a given area c. May go up or down based upon changes in an index Correct d. Gradually increases throughout the term of the loan Feedback The correct answer is: May go up or down based upon changes in an index

After-tax cash flow is calculated by: Select one:

a. Before-tax cash flow minus taxes b. After-tax cash flow plus taxes c. Net operating income plus reserves minus taxes Incorrect d. Before-tax cash flow plus reserves minus taxes Feedback The correct answer is: Before-tax cash flow minus taxes

Dick and Beth are both active real estate brokers who have offices next to each other. Dick and Beth share the services of a secretary and a common waiting area. Beth has placed her official sign on the entrance of her office; however, Dick has been unable to find time to place his sign. If a complaint is filed against Dick for breach of trust in a real estate transaction, which of the following would best describe the situation? Select one:

a. Beth alone would be penalized since she had her sign properly displayed b. Dick alone would be penalized since he was the person who breached the trust Incorrect c. Both Dick and Beth would be penalized since they appear to be partners, creating an ostensible partnership d. Both Dick and Beth since they have created a legal partnership Feedback The correct answer is: Both Dick and Beth would be penalized since they appear to be partners, creating an ostensible partnership

Characteristics of successful salespersons include: I. Empathy II. Ego drive III. Clear enunciation Select one:

a. I, II and III b. I and II only c. I and III only Incorrect d. II and III only Feedback The correct answer is: I and II only

Broker Bill has been working with a buyer who is considering buying a home in which the deposit will be in the form of a promissory note. What, if any, are the steps required in order for Bill to accept a promissory note as a deposit? Select one:

a. Bill should obtain permission from the seller and then place the note in a place of safe keeping until it matures. Correct b. Bill should place the note in a place of safe keeping and notify the seller immediately. c. Bill should notify the seller and then place the note in a place of safe keeping. d. Bill is not allowed to accept promissory notes. Feedback The correct answer is: Bill should obtain permission from the seller and then place the note in a place of safe keeping until it matures. Question 21IncorrectMark 0.00 out of 1.00Not flaggedFlag question Question text Which of the following would not be an acceptable location for an item to be held in escrow? Select one:\ a. Beach Bank b. Shifty Savings and Loan Incorrect c. Broker Bob's office safe d. Charles Schwab Mutual Fund Feedback The correct answer is: Charles Schwab Mutual Fund

Tom is an investor who is building a new apartment complex. In order to ensure that the property will be ready for occupancy at the agreed upon date, the contractor provided Tom with a completion bond. This type of risk is known as: Select one:

a. Business risk b. Dynamic risk c. Static risk d. Construction risk Incorrect Feedback Static risks are those risks that are insurable. These risks include fire, theft, and construction-completion bonds. These are the kinds of risks that are part of the day-to-day activities of real estate. The correct answer is: Static risk

State intangible tax and documentary tax on the note are typically charged to which of the following? Select one:

a. Buyer. Correct b. Seller. c. Buyer or Seller. d. Mortgagee. Feedback Your answer is correct. Documentary Stamps on Notes, Documentary Stamps on Tangible Taxes. The promissory note is taxed when a new loan is created, or if a loan is assumed. The cost is $.35 for each $100 of debt and fractional $100 for either the new loan or an assumed loan. Those loans taken Subject to Mortgage are not taxed. This is normally debited to the buyer. The law expects this tax to be paid by the mortgage owner (lender); however, the mortgagor (buyer/borrower) usually agrees to pay the tax to obtain the loan. Thus, this tax is normally shown as a debit to the buyer on the closing statement. The correct answer is: Buyer.

Tom decides to make an offer on Carol's house which was built in 1960. Which of the following items apply to this situation? Select one:

a. Carol must provide a pamphlet about the hazards of lead-based paint prior to closing b. Carol must provide a disclosure about the existence of any lead- based paint on the property prior to contract c. Carol must provide a disclosure about the existence of any lead- based paint prior to closing d. A and C Incorrect Feedback The correct answer is: Carol must provide a disclosure about the existence of any lead- based paint on the property prior to contract

The seller has agreed to sell her washer and dryer to the buyer for $500. How will this show up on the closing statement?

a. Debit to the buyer and credit to the seller Correct b. Debit to the seller and credit to the buyer c. Debit to the buyer and receipt on the broker's statement d. Credit to the seller and a disbursement on the broker's statement Feedback The correct answer is: Debit to the buyer and credit to the seller

Which ratio is used to determine if a company has the ability to meet its current obligations without considering its inventory worth? Select one:

a. Debt-to-net worth ratio Incorrect b. Quick ratio c. Inventory turnover ratio d. Net profit to owner capital Feedback The correct answer is: Quick ratio

g are cash operating expenses except: Select one:

a. Depreciation b. Management fee Incorrect c. Real estate taxes d. Repairs and maintenance Feedback The correct answer is: Depreciation

Which type of agency is a fiduciary relationship? Select one:

a. Dual agent b. Single agent Correct c. Transaction broker d. Designated sales associate Feedback The correct answer is: Single agent

Characteristics of a successful sales associate include:

a. Education and age Incorrect b. Empathy and ego c. Education, ego, and age d. Education, empathy, ego, and age Feedback The correct answer is: Empathy and ego

Once a complaint has been determined to be legally sufficient, the next step is for an investigation to be performed. Once the investigation is completed, the report will be delivered to which of the following? Select one:

a. FREC b. Division of Real Estate c. Administrative Law Judge d. Probable Cause Panel Incorrect Feedback The correct answer is: FREC

Bill entered into a written lease that started on February 1, 2008, and terminates August 31, 2008. The owner sold the property on June 15, 2008, and the new owner decided to cancel Bill's lease so that the new owner's ailing mother could move in. What is the process for Bill to be evicted? Select one:

a. File a writ of possession with the state attorney b. File a demand letter with clerk of courts c. Post a three-day notice of eviction d. This cannot be done legally Correct Feedback The correct answer is: This cannot be done legally

Cash throw-off may also be called: Select one:

a. Forecast cash flow b. Equity cash flow c. After-tax cash flow d. Before-tax cash flow Correct Feedback The correct answer is: Before-tax cash flow

The scope of property management can be categorized by all of the following except: Select one:

a. Full service brokerage Incorrect b. On site management c. Community association management d. Property management firms Feedback The correct answer is: Community association management

If you were buying a house and wanted to protect yourself against any loss arising from disputes over ownership of your property, you would purchase Select one:

a. Hazard insurance b. Errors and omissions insurance c. Title insurance Correct d. Deed insurance Feedback Your answer is correct. Title Insurance

Sally is a sales associate who works for Broker Jenny. Sally collects an earnest-money deposit from a buyer on Monday and was asked to hold the deposit until the offer had been accepted. What can Sally do in this situation?

a. Hold the deposit in accordance to her client's wishes since the FREC requires loyalty b. Turn the deposit over to the broker within three business days in accordance with FREC rules c. Deliver the deposit to her broker within one business day in accordance with FREC rules Correct d. Hold the deposit in accordance to her client's wishes after she gets Jenny's written authorization Feedback The correct answer is: Deliver the deposit to her broker within one business day in accordance with FREC rules

Jackie has a subject house that has 3 bedrooms, 2 baths and a 2-car garage. She finds three comparables to reconcile with the subject house. Which of the following is true? Select one:

a. If the subject house is better, add to the subject property's sale price. Incorrect b. If the comparable is better than the subject property, subtract from the comparable property. c. If the subject house is worse than the comparable, subtract from the subject property. d. If the comparable is worse than the subject house, add to the sale price of the subject house. Feedback The correct answer is: If the comparable is better than the subject property, subtract from the comparable property.

The sales-comparison approach: Select one:

a. Is based upon the principle of substitution b. Reflects the market behavior of a typical buyer c. Can be used only in an active market when reliable market sales data is available d. All of the above Correct Feedback The correct answer is: All of the above

The number of days on the market is a major issue with sold comparables. Why is this so important? Select one:

a. It is important because it shows how quickly the buyer found the property and wanted it. b. It shows when properties are overpriced because of unnatural days on the market. c. It shows when properties are underpriced because of unnatural days on the market. d. All of the above. Correct Feedback The correct answer is: All of the above.

Jack wants to build a business with a 42-foot sign on the top of the building. He believes that the sign will generate a lot of business. The city has an ordinance which limits the size of the sign to 30 feet and requires that the sign be on a sign post, independent of other structures. Jack's attorney tells him he had better check with the city before he builds anything. What can Jack do about the sign? Select one:

a. Jack can do nothing about the sign ordinance since it is very clear that the sign can only be 30 feet high and on a sign post. b. Jack may want to get a marketing company to tell him if the sign that is 30 feet high is any good. c. Jack can sue the city and make them change the ordinance since it restricts his business. d. Jack can apply to the zoning commission for a variance. Correct Feedback The correct answer is: Jack can apply to the zoning commission for a variance.

Which is the best description of a multiple license?

a. Licenses issued to a sales associate, who works for multiple entities, under an owner-developer b. Licenses issued to a broker who owns several brokerages c. Licenses issued to a broker associate, who works across several brokerages Incorrect d. Licenses issued to sales associates working under a broker, who owns multiple offices Feedback Your answer is incorrect. A multiple license can be issued to a licensed broker on the condition that the broker can show that it is necessary for their brokerage business, and are issued in circumstances that a broker is legally licensed for more than one brokerage. For each business entity a separate broker license will be required. It is important to note that only a licensed broker can hold multiple licenses, and not a sales associate or broker associate. This differs from a group license, as they are provided to sales associates and broker associates who are registered under the employ of an owner-developer, who may own multiple properties, registered under multiple names. The business entities must meet the condition, that they are all connected, and under the control and ownership of the same individual/s. In short, a multiple license can only be issued to a licensed broker. A group license is a single license that can be issued to a sales associate or broker associate, under the employ of an owner developer. Note that a sales associate or broker associate must only be registered under one employer, at any one time, and may only hold one license

What theory of mortgages does Florida subscribe to:

a. Lien theory Correct b. Title theory c. Mortgage theory d. Debt theory Feedback The correct answer is: Lien theory

If an appraiser is estimating the value of a failing or unprofitable business, he would probably use the: Select one:

a. Liquidation-value approach b. Sales-comparison approach c. Market-data approach d. Income-capitalization approach Incorrect Feedback The correct answer is: Liquidation-value approach

The sale or purchase of securities by the Federal Reserve System (FRS) involves: Select one:

a. Liquidity adjustment b. Changing the discount rate Incorrect c. Reserve requirements of member banks d. Its open market operations Feedback The correct answer is: Its open market operations

A form of constructive notice concerning the existence of a pending litigation, such as a foreclosure, is known as: Select one:

a. Lis pendens Correct b. Recording c. Estoppel certificate d. Satisfaction Feedback The correct answer is: Lis pendens

In the income-capitalization approach, which of the following is not an operating expense? Select one:

a. Management fees b. Depreciation Correct c. Real property taxes d. Reserves for replacements Feedback The correct answer is: Depreciation

Which of the following types of value is used for real property tax purposes? Select one:

a. Market value b. Insured value c. Assessed value Correct d. Investment value Feedback The correct answer is: Assessed value

The land is always valued separately in the: Select one:

a. Market-data approach b. Comparable-sales approach c. Cost-depreciation approach d. Income-capitalization approach Incorrect Feedback The correct answer is: Cost-depreciation approach

Which of the following often service the mortgage loans which they originate? Select one:

a. Mutual-fund companies b. Mortgage brokers c. Pension funds d. Mortgage bankers Correct Feedback The correct answer is: Mortgage bankers

An expert witness testifying in court about the value of property is providing which type of appraisal report? Select one:

a. Narrative report b. Oral report Correct c. Form report d. Letter report Feedback The correct answer is: Oral report

When a tenant agrees to pay rent and specific expenses related to lease space, he has signed a (an): Select one:

a. Net lease Correct b. Add-on lease c. Gross lease d. Sandwich lease Feedback The correct answer is: Net lease

The portion of the sales commission split that is paid to the brokerage and NOT to the associate is called: Select one:

a. Net operating income b. Potential gross income c. Effective gross income d. Company dollar Correct Feedback The correct answer is: Company dollar

The cost approach is used most effectively on which type of properties? Select one:

a. New residential properties. b. Income producing properties. Incorrect c. Old schools or churches. d. Multiple family unit buildings. Feedback The correct answer is: Old schools or churches.

Seller Carl has agreed to let Broker Stephen transition to transaction broker. What disclosure form must Carl receive in order for the transition to be completed? Select one:

a. No Brokerage Relationship Notice b. Single Agent Notice c. Transaction Broker Notice d. Consent to Transition to Transaction Broker Correct Feedback The correct answer is: Consent to Transition to Transaction Broker

Can Broker Carl perform an appraisal at a seller's request? Select one:

a. No, brokers cannot perform appraisals b. No, only the mortgage lender can request an appraisal c. Yes, if Carl has an appraiser's certification and he is not accepting a listing on the property Correct d. Yes, brokers are entitled perform appraisals, provided they adhere to the Uniform Standards of Professional Appraisal Practice (USPSP) Feedback The correct answers are: Yes, if Carl has an appraiser's certification and he is not accepting a listing on the property, Yes, brokers are entitled perform appraisals, provided they adhere to the Uniform Standards of Professional Appraisal Practice (USPSP)

Broker Beth discovered that a $2,500 deposit was left in escrow after an offer to purchase was turned down. Beth was unable to locate the individual who made the offer. What action should the broker take in this situation? Select one:

a. Notify the FREC within fifteen days of the offer being rejected Incorrect b. Turn the deposit over to the seller as liquidated damages c. Turn the deposit over to the Recovery Fund d. Turn the deposit over to the Department of Banking and Finance Feedback The correct answer is: Turn the deposit over to the Department of Banking and Finance

The landlord was reviewing his property management agreement with the broker. He noted that the broker had not charged enough rent to tenants to make the type of profit that the owner wanted. The correct amount of rent in an open, free market the broker should have charged is called: Select one:

a. Physical rent. Incorrect b. Economic rent. c. Prorated rent. d. Rent controlled. Feedback The correct answer is: Economic rent.

Which of the following is a function of management that can be achieved through the company's budget? Select one:

a. Planning b. Organization c. Controlling d. Planning and controlling Incorrect Feedback The correct answer is: Planning

All of the following statements apply to local planning commissions except: Select one:

a. Planning commission members serve on a volunteer basis b. Planning commission members typically have extensive professional training c. Planning commission members act in an advisory roll d. Planning commissions typically have responsibility in subdivision plat approval, site plan approval, and sign control Incorrect Feedback The correct answer is: Planning commission members typically have extensive professional training

Which of these items are prorated at closing? Select one:

a. Property taxes b. Homeowner's fees c. Rent d. All of these Correct Feedback Your answer is correct. Items Typically Prorated Items that are paid in advance or arrears are prorated between buyer and seller according to the date of closing. Items that are prorated at the closing include property taxes, homeowner's fees, rent (if a tenant will continue to reside on the property after closing), and pre-paid interest on an assumed mortgage loan. Except for principal payments on a mortgage, most real estate expenses such as rent, insurance, and homeowners' association dues are paid in arrears. Upon closing a real estate transaction, these various expenses are prorated between the buyer and the seller to ensure that each is responsible for the operating expenses of the property during his or her ownership. Since the ownership of the seller and buyer are each fractional in the year of the transaction, there must be an adjustment period over which item is prorated made so that each owner pays their proportional share. The correct answer is: All of these

Which of the following is an example of a fixed expense? Select one:

a. Property taxes b. Property management commission Incorrect c. Utilities d. Housekeeping fees Feedback The correct answer is: Property taxes

A normal contingency in a real estate contract would be that the Select one:

a. Purchaser can obtain a satisfactory home inspection from a qualified inspector. b. Seller is allowed to come back and spend two weeks in the house each year. c. Purchaser can have occupancy as soon as the sales contract is signed. Incorrect d. Seller is allowed to dig up some of the landscaping and take it with him. Feedback Your answer is incorrect. Contingencies A contingency is a condition or a provision that must be met before the contract can be completed. The broker and the closer need to see that all terms and conditions are met before or as closing occurs. Any contingencies in the contract must be tracked and completed to ensure contract fulfillment. This is where the timelines can get tricky. You have to pay attention to details such as business days versus calendar days. If the buyer intends to finance the transaction, the appropriate mortgage application should be submitted as soon as possible. If the Purchase and Sale Agreement contains a financing contingency, the buyer will be entitled to cancel the contract if he or she is unable to obtain mortgage financing. The contract may also contain other contingencies that must be satisfied before a party is obligated to perform, such as a satisfactory structural report (home inspection), approved title search and commitment, or termite inspection. The correct answer is: Purchaser can obtain a satisfactory home inspection from a qualified inspector.

Which of the following hazardous substances is believed to cause brain damage if ingested? Select one:

a. Radon gas b. Asbestos c. Lead-based paint Correct d. All of the above Feedback The correct answer is: Lead-based paint

All of the following contracts must be in writing in order to be enforceable except: Select one:

a. Real Estate Sale and Purchase Contracts b. Listing Contracts c. Option Contracts Incorrect d. Leases for more than one year Feedback The correct answer is: Listing Contracts

Which of the following is not a requirement of a valid mortgage? Select one:

a. Recording Incorrect b. In writing c. Legal description d. Terms of the debt Feedback The correct answer is: Terms of the debt

If a mortgage document permits the mortgagor to borrow funds which have been repaid, it contains a (an): Select one:

a. Release clause b. Open-end clause Correct c. Exculpatory clause d. Subordination clause Feedback The correct answer is: Open-end clause

The amount required to construct a new building of equal utility to the building being appraised is: Select one:

a. Replacement cost b. Depreciated cost c. Reproduction cost Incorrect d. Current cost Feedback The correct answer is: Replacement cost

Which of the following types of zoning is concerned with intensity?

a. Residential b. Agricultural c. Commercial Correct d. Mixed use Feedback There are five classifications of zoning: 1. Residential Zoning is based on the number of units per acre (density). This zoning addresses setback requirements and specifies that the structure must be used for residential purposes only. 2. Commercial Zoning is based on the degree of use (intensity). This zoning addresses size, height, and traffic. In commercial zones, efforts are made to control the intensity of use, meaning an effort is made to control public use and access numbers. 3. Industrial Zoning is also based on intensity. This zoning addresses issues such as noise, smoke, odors, and other industrial concerns. 4. Agricultural Zoning addresses agricultural and farming needs. 5. Special-Use Zoning considers the public needs with regards to schools, courthouses, and other public facilities. The correct answer is: Commercial

Broker Beth sold a rental list to Frank on September 23rd for $300. Frank discovered the list contained properties that were not available. If Frank demands a refund on October 5th and Broker Beth refuses, which penalty could the FREC impose? Select one:

a. Revoke license b. Up to one year in jail c. Up to $10,000 fine d. All of the above Incorrect Feedback The correct answer is: Revoke license

Broker Rita accepts a listing from Seller Bill. Rita agrees with Bill's request not to show the property to any prospective buyers before 9:00 a.m. One day, Rita has a potential buyer, but he wants to see the house at 8:00 a.m. because he is leaving town that morning. How should Rita handle this situation? Select one:

a. Rita should inform the buyer that she can't show the house until 9:00 a.m. Correct b. Rita should show the house because it might lead to a full price offer c. Rita can show the house at 8:00 a.m. if Bill's instructions were not in writing d. Rita can show the house at 8:00 a.m. if Bill is not at home Feedback The correct answer is: Rita should inform the buyer that she can't show the house until 9:00 a.m.

Broker Sally has decided to move a branch office from Jupiter to Palm Beach Gardens. Given this information, which of the following would best describe the situation? Select one:

a. Sally must notify the Division of Real Estate within 10 days of her move and request a cancellation of the Jupiter office b. Sally must notify the Division of Real Estate within 60 days of her move and request a new registration for the Palm Beach Gardens office c. Sally must notify the Division of Real Estate within 10 days of her move Incorrect d. Sally is required to obtain a new registration for the new branch office prior to beginning operations. Feedback The correct answer is: Sally is required to obtain a new registration for the new branch office prior to beginning operations.

The basic motivation of those people whose income and living standards are at the subsistence level is: Select one:

a. Self-esteem b. Self-fulfillment c. Self-preservation Correct d. Self-identification Feedback The correct answer is: Self-preservation

The basic motivation of those individuals who require being important and recognized by others is: Select one:

a. Self-fulfillment Incorrect b. Self-preservation c. Self-identification d. Self-esteem Feedback The correct answer is: Self-esteem

After accepting a deed in lieu of foreclosure, Shifty Bank discovers that hazardous substances are present on the subject property. They immediately, and prudently, notify the EPA of the condition. Is Shifty Bank liable for the cost of cleanup? Select one:

a. Since the bank did not own the property at the time of contamination, the bank is not liable b. Since the bank acted prudently after discovering the condition, the bank can declare Innocent Landowner Defense Incorrect c. The bank is liable because it is now the present owner d. Only the former owner before the bank is liable Feedback The correct answer is: The bank is liable because it is now the present owner

Which type of agency relationship has the duty of loyalty?

a. Single agent Correct b. Transaction broker c. Dual agent d. General agent Feedback The correct answer is: Single agent

Kevin is preparing a Comparative Market Analysis for a potential listing. He will gather information on all of the following comps except: Select one:

a. Sold properties b. Listings scheduled to expire later this month c. Listings scheduled to go on the market later this month Correct d. Properties that have been on the market for the last 6 months Feedback The correct answer is: Listings scheduled to go on the market later this month

A short-term mortgage which requires the payment of interest only with the principle amount borrowed due in full upon maturity of the loan is a: Select one:

a. Straight-term mortgage Correct b. Fully-amortized mortgage c. Partially-amortized mortgage d. Standard fixed-payment mortgage Feedback The correct answer is: Straight-term mortgage

Susan is comparing properties in the area. Her subject house is a two-story home with a three-car garage, 4 bedrooms, 3 baths, a swimming pool and a screened-in porch in the Avondale subdivision. She finds comparables in the same subdivision that include a two-story with a three-car garage, 4 bedrooms, 3 baths, a pool, but no screened-in porch. What should Susan do with this information? Select one:

a. Susan should reject the information since it does not have a screened-in porch. b. Susan should add the cost of a screened-in porch to the sold price of the comparable to make it similar to the subject house. c. Susan should subtract the cost of the screened-in porch from the subject house to make it similar. Incorrect d. Susan should find other comps that are more like the subject house. Feedback The correct answer is: Susan should add the cost of a screened-in porch to the sold price of the comparable to make it similar to the subject house.

A broker's trust liability is:

a. The actual money in escrow b. Actual money - expenses c. The total sum of all deposits received, pending and being held Correct d. The difference between the escrow account and the business account Feedback The correct answer is: The total sum of all deposits received, pending and being held

"Marketability" refers to the ability of an asset to sell quickly for: Select one:

a. The amount of its assessed value b. Its current market value Correct c. At least the amount of its initial cost d. More than its original cost Feedback The correct answer is: Its current market value

Associate Terri sold a home and was expecting to share the commission with her broker, Tim. After receiving the commission check at closing, Tim had an unexpected bill from the IRS and used the entire commission for that purpose. Which of the following statements best describes this situation? Select one:

a. The commission belongs to the broker and he is not required to pay associates under unusual circumstances b. Tim may be guilty of failure to account and deliver Correct c. Terri may sue Tim and the seller for her share of the commission d. Terri can request that her share of the commission be collected from the Real Estate Recovery Fund Feedback The correct answer is: Tim may be guilty of failure to account and deliver

tee on a mortgage loan depends upon: Select one:

a. The credit rating of the borrower Incorrect b. The geographical location of the property c. The amount of the loan d. The amount of the down payment Feedback The correct answer is: The amount of the loan

Fred wants to lease his home for 6 months. He lists the rental with Broker Karen. The property is located in the historical district in a town where all homes were constructed prior to the Vietnam War? What advice should Karen give Fred so that Fred is in compliance with the law? Select one:

a. The lease should contain a radon gas disclosure b. The lease should contain an lead-based paint disclosure c. Tell Fred that since it is a rental, no disclosure notices are required d. A and B Correct Feedback The correct answer is: A and B

What is the difference between a list price and a sale price? Select one:

a. The list price is the price the market will accept. b. The list price is the value given by the appraiser. c. The list price is the price at the closing of the transaction that the buyer pays. d. The list price is the price established by the seller and may be changed to a sale price at the time of an offer. Correct Feedback The correct answer is: The list price is the price established by the seller and may be changed to a sale price at the time of an offer.

All of the following conditions must occur in order for an owner to be eligible for the innocent landowner defense except: Select one:

a. The owner was not aware of any contamination at the time of purchase Incorrect b. The property must appear on the National Priorities List c. Upon discovery of the contamination, the owner acted prudently d. Prior to purchase, the owner exercised due diligence in an attempt to discover if the property was contaminated and inquired into any past uses of the property that might have led to contamination Feedback The correct answer is: The property must appear on the National Priorities List

Jill, Jan, and Brenda formed a general partnership to broker real estate where Jan is the only active broker. If Jan dies, which of the following statements would best apply? Select one:

a. The partnership has fourteen business days to replace Jan or the partnership registration will be involuntary inactive b. The partnership has fourteen days to appoint another broker of record or the partnership will be cancelled Correct c. The partnership is not required to replace Jan if Jill and Brenda are both sales associates d. Jill and Brenda should now establish a joint venture Feedback The correct answer is: The partnership has fourteen days to appoint another broker of record or the partnership will be cancelled

A loan application is the ____ step in applying for a loan. Select one:

a. Third. b. Fourth. c. First. Correct d. Second. Feedback Your answer is correct. Loan Application. A Loan Application is the first step in applying for a loan. Information is included in the application that helps a loan officer determine if a buyer may qualify for a loan. The correct answer is: First.

Which of the following is the ultimate purpose of a business appraisal? Select one:

a. To estimate liquidation value Incorrect b. To estimate a going-concern value c. To estimate a comparative business value d. To estimate tangible asset value Feedback The correct answer is: To estimate a going-concern value

Forest is a veteran and has employed Broker Bill to assist him in finding a home. Bill was able to find a home that Forest liked and proceeded to prepare the contract. The contract stipulated that Forest would pay intangible tax, doc stamps on the note, and the mortgage brokerage fee. If the property appraises for the contract price, will the VA guarantee this loan? Select one:

a. Yes, since the VA now allows the veteran to pay all closing costs Incorrect b. No, because the veteran is not permitted to pay closing costs c. Yes, provided the loan can be sold in the secondary market d. No, because the veteran is not permitted to pay commissions Feedback The correct answer is: No, because the veteran is not permitted to pay commissions

Which of the following subjects is not covered in the state exam? Select one:

a. appraising b. investing Incorrect c. agency law d. brokerage management Feedback Your answer is incorrect. The Florida real estate license state exams are conducted by Pearson Vue, and exams can be requested in either English, or in Spanish. The state exam follows the same format as the 72 hour broker pre-license course exam, and consists of 100 questions to test the students' knowledge of; real estate appraising investment financing brokerage and management operations" The correct answer is: agency law

____________is a formal declaration made by the grantor before a duly authorized public official. Select one:

a. constructive notice b. actual notice c. title company d. An acknowledgment Correct Feedback Your answer is correct. Recording Acts The title company is charged with sending the paperwork to the recorder's office (and collects a fee from the buyer and seller to do so), but it is up to the broker to verify the paperwork has been recorded. Every state has a recording system that provides a person who has acquired a real property with a method Of protecting his or her interests in the property by recording the document of conveyance, usually with the county recorder. The recording provides access to information regarding ownership of the property and imparts constructive notice to subsequent purchasers or encumbrancers. Constructive notice (as distinct from actual notice, which is express notice of information given in fact) refers to notice given to the public by the records available. Most states require that a deed be acknowledged for it to be recorded. An acknowledgment is a formal declaration made by the grantor before a duly authorized public official (such as a notary public), that states that the grantor voluntarily signed the deed and that the signature on the deed is the grantors. In most states, there is no requirement of a valid deed that it is recorded; however, if the conveyance is not recorded, it will be considered void as against subsequent purchasers or encumbrancers who act in good faith without actual knowledge of the prior, unrecorded conveyance. The correct answer is: An acknowledgment