PSI

If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month?

$1,150

A property sold for $125,000 with a loan of $50,000. The seller paid $2,000 in closing costs and a 7% commission? How much would the seller net?

$125,000 x 7% = $8,750 in commission. $125,000 - $50,000 - $2,000 - $8,750 = $64,250 net.

If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5-1/2%, or a 20- year loan at 4-1/2 % what is the largest loan ( USE AMORTIZATION TABLE)

$176,100

An appraised must be licensed of certifed to handle federally related work on residential property valued at more than?

$250,000

A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender charges 2 points. How much money does the buyer need up front to make the purchase?

$26,720

A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.)

$407

A property had a list price of $164,000, an actual sale price of $158,000 and a $124,000 loan. If the transfer fee was $3 per $1,000, what was the fee?

$474, $158,000 / $1,000 = 158 x $3 = $474 The transfer fee is based on sale

A buyer bought a property for $60,000 which had an appraisal of $58,000. If the lender charged 1 1/2 discount points, with the borrower receiving a 90% loan, how much were the points?

$783, A lender makes a loan on the lower of sale price or appraisal. Discount points are computed based upon the actual loan amount. In this case, the lower of the two figures is $58,000 x 90% = $52,200 for the loan x 1.5% = $783 for the discount points.

On January 15, A seller paid $960 in annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the sellers credit for the property taxes already paid if the buyer pays for the day of closing? use a 360- day year and 30 day month.

$800

An owner lists his home and agrees to pay a 6% commission on provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?

$90,426

Mortgage Brokers, Lenders, and Servicers Licensing Act applies to:

(1) The Mortgage Brokers, Lenders, and Servicers Licensing Act does apply to loans on 1-4 family dwellings. It does NOT apply to all residential dwellings, commercial buildings or only loans made by federally regulated lenders.

A licesne is the listing property in a known flood plain. The seller flatly denies that the structure and the property have ever been flooded. What is the licensee required to do in this situation?

Inform the seller of the legal obligation to disclose facts regarding flood plains.

A subordination clause in a mortgage does which of the following?

It changes the priority of the mortgages

Even with title insurance, the policyholder may still suffer losses arising from

Land use change due to zoning ordinances.

Failure of a real estate agent to comply with Fair Housing practices is punishable by

License revocation and criminal prosecution.

In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT

More variety of loan programs avaiable.

According to the principle of progression, A three bedroom, on story home is most likely to bring the highest sales price if located in a neighborhood in which

Most homes are larger than the sale home.

Which of the following statements would be FALSE concerning salesperson Ms. Smith conducting a closing?

Ms. Smith's broker must attend the closing conducted by Ms. Smith

What critical aspect of the property inspection process MUST licensees convey to prospective buyers?

Need for inspections to be completed within the time stated in the contract.

A gross lease can be best defined as one where the tenant pays, as a part of the rent,

No operating expenses of the leased space.

Which of the following documents would NOT be seen based upon the Construction Lien Act?

Notice of Termination

Y offers X $60,000 for X's property. Which of the following terms BEST describes the role of X?

Offeror, Y (offeror) is making the offer to X (offeree)

Which of the following types of listings would give the broker the LEAST protection for receiving commission?

Open listing

An exclusive right to sell listing is given by an owner to a broker. Which of the following would be required of the owner?

Pay the broker a commission upon completion of the sale of property

According to the truth in lending act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the

Prepayment penalties and rebates.

Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are atomically conveyed with property. In others, all water rights are controlled by the state under the doctrine of?

Prior appropriation.

In MOST states, foreclosed property is sold through

Public Auction.

Which of the following liens would take priority over all others?

Real estate tax lien

Antitrust laws prohibit competing brokers from all of the following EXCEPT

Receiving compensation from both the buyer and the seller.

Which of these Federal Laws Regulates the advertisement of a lenders credit terms (rate, payment, ETC.)

Regulation Z.

In using the cost approach to value on an older building, which type of cost would be best?

Replacement cost

If a lender does not want to weaken the security of a property if taxes are unpaid, the lender should:

Require the prepaid tax money paid by the owner be put into a lender's escrow or impound account

Which of the following statements are true for salesperson Sally Brown to be considered an independent contractor?

Sally must have a written contract with her broker that indicates that she is responsible for her own taxes, and her annual compensation from her broker must be at least 75% from commissions from the sale of real estate

In the sale of property, there is often confusion over whether an item is a fixture or personal property. What is the best way to avoid this confusion?

Specify questionable items of property in the written sales contract.

A building was to be constructed with the dimensions of 110 feet long, 25 feet wide and 20 feet high. Contractor A was going to build the building at $8.20 per square foot while Contractor B was going to build it at $.45 per cubic foot. How much could be saved by using Contractor A rather than Contractor B?

Square feet is determined by multiplying the length X width. Cubic feet is length X width X height. 110` X 25' = 2,750 square feet X $8.20 = $22,550 (Cost of Contractor A). 110' X 25' X 20' = 55,000 cubic feet X $.45 = $24,750 (Cost of Contractor B). $24,750 - $22,550 = $2,200 savings

A building was to be constructed with the dimensions of 130 feet long, 30 feet wide and 24 feet high. Contractor A was going to build the building at $8.90 per square foot while Contractor B was going to build it at $.375 per cubic foot. How much could be saved by using Contractor A rather than Contractor B?

Square feet is determined by multiplying the length X width. Cubic feet is length X width X height. 130` X 30' = 3,900 sq. ft. X $8.90 = $34,710 (Cost of Contractor A). 130' X 30' X 24' = 93,600 cubic ft. X $.375 = $35,100 (Cost of Contractor B). $35,100 - $34,710 = $390 savings

A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as

Steering.

Some out-of-towners had inherited some property. They contacted a local broker to sell the property. The out of town owners wanted to list the property for $50,000. The broker knew that similar properties in that area were selling for $80,000. What should the broker do?

Suggest a market analysis for the seller to estimate the current value of the property

A broker acting as agent for the seller, presents an offer to buy from the brokers former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should

Tell the seller that the buyer will pay more.

A tenant rented an apartment, Signing a 15 month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have?

Tenancy at will.

Which of the following shall a licensee recommend to purchaser?

That a fee title policy in the amount of the purchase price be furnished to the buyer by the seller, issued or certified to the approximate date of closing

The Board of Real Estate Brokers and Salespersons is governed by:

The Board is governed by statute

A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and give homes have been sold to purchsers that the firms agents have contacted. The realty firm has an agency relationship with?

The builder.

Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on mutual release

The buyer finds a better property for better terms.

A buyer was negating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, What recourse does the buyer have?

The buyer may sue the seller for specific performance.

To what party or parties does the broker owe the fiduciary duty care

The client/ The party or parties empaling the broker

An exclusive right to sell listing obtained by a broker associate belongs to?

The employing broker only.

an exclusive right to sell listing obtained by a broker associate belongs to

The employing broker only.

Three identical homes in a neghiborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price?

The first sold.

A handicapped person asked the landlord for permission to alter the apartment. Which of the following is true regarding the costs of changing the apartment back after the termination of the lease?

The landlord can require that it be restored as it was before the alteration

When preparing a market data estimate of value, Which of the following categories of adjustment is NOT essential?

The orginal cost of the building.

Legal descriptions using the government survey system are NOT generally used.

The original 13 states.

A sellers statement in a property disclosure document means

The owner is disclosing known latent defects.

A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if.

The owner withdraws the counteroffer before it is accepeted.

To what party or parties does the broker owe the fiduciary duty of care?

The party or parties employing the broker

From which of the following persons may a salesperson lawfully receive a commission?

The salesperson's broker

A broker has brought a ready, Willing and able buyer to a seller. in MOST listing contracts, the broker has earned his commission when

The seller accepts the offer.the seller accepts the offer.

A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable?

The seller is heavily under the influence of alchol at the time of signing.

A salesperson in a branch office is sued for damages by a buyer after the salesperson misrepresents a property. Who has the ultimate responsibility for the salespersons actions?

The supervising broker

Which of the following statements would be true of a partially amortized loan?

There are generally smaller monthly payments

A change of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department by an administrative law judge within the department of housing and urban development (HUD) or by a federal district court judge in federal court. The advantage of a Federal court hearing to the complaining party is that

There is no dollar limit on damages paid.

Which of the following statements BEST describes the effect on mineral rights when the land is sold?

They pass to the grantee unless specifically noted, Since mineral rights are an appurtenance to the land, they automatically pass to the grantee (buyer) unless specifically excluded in the deed.

A local multiple listing service (MLS) passed a rule saying that any broker who charges less than 4% commission in a minority area cannot belong to the MLS. Which of the following statements would be true?

This is illegal as this violated price fixing laws under the Sherman Anti-Trust laws

Which of the following is NOT contained in a note?

Title insurance

Where would one look to find out what type of structure is allowed to be built on a certain piece of ground?

Zoning ordinances

A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest

a competitve market analysis to determine the property value.

The main difference between a cooperative and condominium is that:

a condominium owner owns and finances their own unit

Michigan Due On Sale Clause Act applies to:

a loan on a manufactured home

An agency relationship between a property owner and a property manager is usually created by

a management agreement.

If a licensee has violated the law, the Department may issue a citation to the licensee containing all of the following EXCEPT:

a notice that the respondent licensee has 6 months to accept or reject the citation

An escheat occurs when

a property owner dies without heirs or a valid will.

A deed restriction is applicable to the actives of

all overs, present and future.

The best way to estimate value for a residential property is with:

an appraisal

A final payment on a loan that was larger than the previous payments would be called a(n):

balloon payment

To be valid, every deed must

be executed by the grantor

A salesperson in trying to list a property, tells the seller that minorities are moving into the area and property values might devalue. This would be:

blockbusting

A listing broker, in an effort to obtain a listing, tells a property owner that the owner's home is located in a racially changing neighborhood. This is:

blockbusting, Blockbusting is trying to scare owners into selling by saying persons of a protected class are moving into the neighborhood

Ordinances that specify construction standards are

building codes

Depreciation is calculated based on the

cost of the building only.

A buyer's agent presents an offer to a seller. The buyer's agent is not acting as a dual agent. In relation to the buyer's agent, the seller would be a(n):

customer, Since the buyer`s agent represents the buyer only and not the seller, the buyer would be the client and the seller would be the customer (one an agent works with but does NOT represent).

A for-sale-by-owner lists a property with a broker. The broker puts the listing in the multiple listing service. The seller continues to advertise the property themselves. The seller then finds a buyer for their own property but still owes a commission to the broker. This must have been a(n):

exclusive right to sell listing

An agency agreement between a seller and broker is normally created with an:

expressed agreement

All of the following would subject a licensee to a penalty under the Michigan state license law (also known as Occupational Code or Act 299) EXCEPT:

failing to provide a written agency disclosure to a prospective buyer of a 5 family flat

When a listing broker is preparing an offer to purchase for a buyer a customer, contingencies involving inspections or approval by a third party should

have short deadlines.

The day after a brokers listing on a house, expired it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the called that

he is no longer the listing agent.

Under the common law of agency, licenses owe the broker with whom they are associated all of the following duties EXCEPT

indemnification.

An appurtenant easement can be terminated by:

merger of the properties, The merger of two properties would terminate an appurtenant easement as one cannot have an easement across a property one owns

Mediators who work matching lenders with borrowers are called:

mortgage brokers

S owns a property and lists the property for sale with a broker. The broker finds a buyer who makes an offer on the property. S is considered to be the:

offeree

All of the following would be true of property management accounts EXCEPT:

only a real estate broker may be a signatory on drafts or checks drawn on property management accounts

A contract that begins as uni-lateral but could end up being bi-lateral is a(n):

option contract

An escrow or impound account for the lender is for holding:

prepaid taxes and insurance

The purpose of laws allowing for the state to take property through escheat is to:

prevent land from becoming ownerless

A written document that is used to promise repayment of a loan is called a:

promissory note

In order for a real estate sales contract to be valid, it must include a:

property description

An environmental impact statement typically describes the effects of a proposed project on factors such as

public health and safety.

A buyer who had insufficient funds for a down payment gave a note and mortgage to the seller for the difference. This is BEST referred to as

purchase money mortgage

The right of a person to regain title to property after paying all debts is known as:

redemption

The Board may assess penalties for all the following EXCEPT:

representing more than one party in a transaction with the knowledge and consent of the parties

The department of housing and urban development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some federal agencies, such as FHA,

require the buyer to acknowledge disclose of the presence of any known paint.

A person owned a property next to a stream. The owner's rights to use the stream are referred to as:

riparian

A property that has an easement crossing it is called:

servient tenement, A servient tenement is the land burdened by the easement

A listing agreement that is obtained by a broker or salesperson shall:

set forth a definite expiration date

A competitive markert analysis is MOST often used for

setting a listing price.

At the conclusion of a hearing regarding a complaint against a licensee, an administrative law hearings examiner:

shall submit a determination of findings of fact to the appropriate board and may recommend penalties to be assessed

When a principal authorizes an agent to perform a particular act or transaction, it is an example of a

specail agency

Under the Construction Lien Act, the type of improvement covered would include labor provided by:

subcontractor

The direct sales or market data approach is based upon the principle of:

substitution, The market data approach looks at comparables which is using substitution

A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property the agent should

tell the seller to disclose the termite treatment on the property disclosure.

During the listing presentation, the seller questions the amount of commission to be paid and is told

the amount of commission is negotiable.

A licensee does not have to submit backup offers to a seller client UNLESS:

the listing agreement requires that subsequent offers be presented

Most closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name (s) and social security number (s) and

the sale price.

A person owns a property in an improvement district. An assessment roll has been confirmed for that area. The owner is in the process of selling the property. A buyer should be informed that:

this property will be subject to a special assessment tax

A contract where one party is bound to perform but the other party is not would be referred to as:

uni-lateral, A uni-lateral contract is a one way promise - a promise for an action. One party is bound but the other is not.

A lender charging an interest rate that is higher than allowed by laws would be violating:

usury laws

The principle of progression in the selling of a property would be best illustrated when the other homes in the neighborhood:

were nicer than the sold property

The buyer is assuming a mortgage presently on the property in the amount of $11,000 what is the adjustment made at closing?

Credit buyer $110,000; debit seller $110,000

Which instrument indicates involuntary alienation?

Deed in foreclosure

A borrower has defaulted on the mortgage. The Mortgage contains an acceleration clause. This permits the lender to

Demand immediate payment of the entire note.

Listing, what obligation does the licensee have to the seller and the listing broker at the other company?

Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer.

A buyer was considering purchasing a new home that the listing broker was aware had been built on a toxic waste dump. What duty does the listing broker owe to the buyer?

Disclosure

Equal housing opportunity notice MUST be

Displayed in the brokerage office.

A person dies with no valid will and no heirs. The state government could claim ownership of this property through what government right?

Escheat

Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells it, a commission will be due. What kind of listing contract do the owners have?

Exclusive agency listing.

What is the greatest type of interest an owner can receive in a condominium?

Fee simple

Which of the following duties BEST describes the duty of a property manager to the owner?

Fiduciary, A property manager is generally considered to be a general agent for the owner, thus owing the owner fiduciary responsibility

A seller and buyer have agreed to a sales contract. The buyer backs out of the agreement. Which of the following could the seller NOT do?

File for a writ of execution

Which rule of thumb formula for estimation property value is being offered to an investor who is told that A house renting for $900 a month should sell for about $90,000

GRM

Which would be the best example of a buffer zone?

Garden apartments between a residential area and shopping center

The day after a brokers listing on a house expired, it was listed with another broker and offered in the MLS. Several days later; a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that

He is no longer the listing agent.

The main difference between tenancy in common and joint tenancy is that with tenancy in common, When a co-owner dies,

His undivided interest passes to his heirs

A broker signs an exclusive right to sell listing with an owner. The next day, the owner talks to another broker about listing the same property. What should be the broker's response to the owner?

I cannot list the property while another broker has a current exclusive listing

A buyer made an offer on a house and the seller accepted the offer as written. The buyer wanted some of the seller's personal property to remain with the house. The personal property would transfer to the buyer under which of the following conditions?

If it was included in the contract

Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond?

If you feel it is in your best interest, please do so.

Earnest money should be deposited into a trust account

In a timely manner, according to state laws.

Capitalization refers to which valuation approach?

Income

Broker Henry Jones is registered under an assumed name of Baker Realty Company. In offering his personal residence for sale, how may he NOT advertise?

Baker Realty Company, by owner, phone number

Prospective buers made an offer on a property. the seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. in the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE?

Both contracts are valid.

Carpeting costs were $19.95 per square yard plus an extra $5.00 per square yard for padding. If a room measured 22.5' by 15', what would be the total cost to install the carpet?

22.5` x 15' = 337.50 square feet / 9 = 37.50 square yards x $24.95 = $935.63

Under the Federal Fair Housing Law, Which of the following is considered discriminatory advertising?

Catholics preferred.

Which of the following services can be provided by a real estate salesperson?

Competitive market analyeses

A landowners wishes to build a nehiborhood grocery store on a busy street in an area zoned for residential use. which of the following would MOST likely be used to obtain permission for this store?

Conditional use permit or zoning variance.

What kind of value does the government use in raising money for operations?

Assessed value, An assessed value is used in applying a tax rate and raising money for the government.

With regards to water rights and prior appropriation concepts, which of the following terms might be applicable?

Avulsion

When a salesperson terminates employment with a broker by giving the employer a written notice of termination, how long does the broker have in which to mail by certified mail the salesperson's license to the Department?

5 days, The broker has 5 days in which to deliver or mail by certified mail the salesperson's license to the Department.

How much of a grace period would you have to renew your license without applying for relicensure to the Michigan Department of Licensing and Regulatory Affairs (LARA)?

60 days from date of expiration

Which of the following consumers would be able to derive the most benefit from a reverse mortgage?

A couple in their late 60s who need to tap their home equity to help cover their expenses but do not want to sell their house

Which restrictive covenant would be considered illegal?

A covenant that restricts selected parcels within a defined

A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor?

A license.

Which of the following would NOT be a protected class under the federal fair housing laws?

A person currently addicted to illegal substances is NOT a protected class under the federal fair housing laws.

From which of the following persons may a salesperson lawfully receive a commission?

A salesperson may only receive commission from the salesperson`s own broker.

State laws differ on whether a buyer is entitle to know about

A suicdie that occurred in the house last year

XYZ listed a property for sale and put the listing in the multiple listing service (MLS). ABC, working with a prospective buyer, cooperated through the MLS and showed the property. What is true?

ABC is a subagent of XYZ

Salesperson Susan was at the local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. Susan should

Advise her friends that could conceit a violation of Sherman antitrust act.

A managing broker can be held responsible for

All real estate activities of salespersons.

A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is

An ageny to the broker and a subagent to the principal.

Which of the following would transfer legal use but not ownership of a property?

An easement

A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasis cash flow or income over the maintenance of value?

An individual entrepreneur who won several apartment buildings.

The FHA functions MOST like

An insurance company

A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called?

An option contract

Which of the following scenarios would require an easement by necessity?

An owner was landlocked and could not gain access to his property

A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbors land to gain access to the river. He pays the neghibor $9,000 for the right of access and receives a deed, This is an easement

Appurtenant

What is the duration of a home warrants coverage?

As disclosed in the contract that offers the warranty

Taxes on a property were paid in arrears running from July 1st to June 30th. If closing was on April 15th and the annual taxes were $912, what was the tax proration?

As taxes were paid in arrears, the seller would owe from July 1st to April 15th of the next year which is 9 months and 15 days or 285 days. $912 annual taxes / 360 days = $2.53 per day for taxes x 285 days = $721.

A salesperson, while in the process of trying to obtain a listing, notices stains on the ceiling of the property. What should the salesperson do?

Ask the seller about roof leaks

Which of the following would the Department LEAST likely do?

Assess penalties after a hearing