Real Estate Final School Test
Sales contract may not include
A set commission fee schedule
What is the one aspect of membership that all NJ real estate Real Estate board members may not share?
Being appointed by the governor
If a broker charges a client $50 in advance fees for services to be rendered, what must the broker than do?
Provide the client with an accounting of how the fee was used
When does a NJ License real estate license expire?
When the license does not renew or reactivate the license within 2 yrs after becoming inactive (C)
a miner openly lives and Prospects on a 20,000 acre ranch. After 20 years, the owner notices the minor and kicks them off the property. The minor makes a claim of ownership to the property. This claim will likely be A) upheld, because the possession was not concealed B) decline in favor of an easement by prescription C) decline, because the occupancy period Was insufficient D) decline since the owner was not aware of The Possession
a
which of the following transactions requires a larger lender more than 5 loans per year to use the CFBP closing disclosure form A) the buyers/borrower is not represented by a broker B) the loan is for a 30-year fixed first mortgage secured by a house C) the loan amount exceeds $85, 000 D) the closing cost exceeds 1% of the loan amount
b
a buyer submitted an offer to the seller. While the seller is considering the offer, the buyer calls and cancels the offer, saying the home was too expensive. The seller protest, claiming she was going to accept the contract. Which of the following is true A) the buyer may not revoke the offer in such a short period Of time B) the seller may accept the offer, thus binding the buyer to a contract C) the seller can offer to lower the price, thereby binding the buyer D) the original offer is canceled, and the protest means nothing
d
During the executory period of a sale contract, the buyer enjoys which of the following interests?
equitable title
An apartment building has an effective income of $150,000. Its bills total $64,000, and depreciation is an additional $12,000. Interest payments on the loan total $40,000, and principal payments are $5,000. What is the property's pre-tax cash flow?
$41,000 [CORRECT]Explain: $150,000 - $64,000 - $40,000 - $5,000 = $41,000 "Cash flow concerns cash items only, and therefore excludes depreciation, which is not a cash expense"
A borrower grosses $4,000 per month and pays $600 monthly for debt obligations. What monthly payment for housing expenses (principal, interest, taxes, insurance) can this person afford based on an FHA debt ratio of 41%?
$760
A sale transaction on rental property closes on December 16. The landlord received the December rent of $713 on December 1. Assuming the closing day is the buyer's, and that the 365-day method is used for prorating, which of the following entries would appear on the settlement statement?
Credit buyer $368.00
Regulation Z does not include
Requirements for limiting credit rates to avoid unfair practices
When does a New Jersey real estate license expire
When the licensee does not renew or reactivate the license within two years after becoming inactive
a principal residence is bought for $180,000. A new porches is added, costing $7,000. Five years later the home sells for $220,000, and the closing cost is $18,000. What is the homeowners capital gain A) $15,000 B) $29,000 C) $33,000 D) $51,000
a
how is a legal life estate created A) by an owner's voluntary Grant B) by operation of law C) through the four unities D) through a defeasible conveyances
b
lenders use the loan-to-value ratio as a guideline in underwriting because A) the property's value serves to measure the profitability of the loan B) the loan amount needs to be less than the property's value C) borrower's tend to inflate the true value of the property D) a full price loan over finances the borrower
b
which of the following ways of specialization is common in the real estate brokerage business A) by background of client B) by type of property C) by years of experience in the business D) by type of mortgage financing required
b
a retailer installs special display counters to exhibit her products. At the end of the lease term, the realtor move to another state, leaving the counters in the store. At this point the counters are considered which of the following A) trade fixtures, and therefor real property B) trade fixtures and their for personal property C) real property, since the trade fixtures were abandoned D) personal property that must be returned to the retailer
c
if a person dies with legal heirs and has left no valid will, what happens to the real property owned by that person A) it is taken by the state according to the process called escheat B) it is probated according to the terms agreed by The Heirs C) it is probated and pass to The Heirs by law of descent D) it is conveyed to the highest bidder at a public auction
c
a family is looking for a home in a certain price range. The wife suggests several listings on the east side of town, and the agent agrees to show the family the suggested properties. In route to targeted neighborhoods, the agent drives a certain route to show the family certain retail services and two schools. What has this agent done wrong A) he is liable for blockbusting B) he has provided on equal services C) he has steered the family D) he has done nothing wrong
d
for a conveyance by deed between private parties to be valid, the deed must be A) warranted by the grantor B) recorded by the grantee C) signed by the grantee D) accepted by the grantee
d
the real estate settlement and procedures act prohibit A) a broker from having any business relationship with any insurance company that is involved in the Brokers transaction B) a broker from pre-qualifying a buyer for a mortgage loan C) a lender from requiring a deposit from a borrower for a tax and insurance escrow account D) A lender from paying a fee to a broker for referring a borrower to the lender
d
Which of the following statements is true?
Business cards must include the licensee's type
An agent knowingly concealing a material fact is called
Knowing omission
A property owner wants to put $240,000. in the bank after selling a property and accounting for all expenses. A broker finds a buyer and sells the property for %28,000. Closing costs come to $10,000. not including the brokers commission. According to the agreement the remainder of the amount over $240,000 goes to the broker as commission. The listing agreement is probably a
Net Listing
A property has a net income of $50,000, interest payments of $35,000, principal payments of $3,000, and annual cost recovery of $7,000. The property's tax rate is 28%. What is the property's annual tax on income?
TOTAL EXPENSES = 35,000+7,000 = 42,00050,000-42,000=8,0008,000*28% = 2,240
a tenant obtains a low rental rate for a building, but agrees to pay all operating expenses. This is example of A) net least B) percentage lease C) gross lease D) proprietary lease
a
a zoning Board of adjustment might give favorable consideration to a land use variance if A) compliance would cause the owners undo and unjustified hardships B) the appeal is prepared by professional land-use attorneys employment the correct procedures C) the owner can demonstrate a valid homestead exemption D) there is a grandfathering clause in the deed
a
which of the following are examples of items typically prorated between seller and buyer at closing A) real estate taxes B) inspection C) survey D) mortgage origination fees
a
A homeowner's rented residence has an assessed valuation of $150,000, and a market value of $170,000. The homestead exemption is $25,000. Tax rates for the property are 7 mills for schools; 3 mills for the city; 2 mills for the county; and 1 mill for the local community college. What is the homeowner's tax bill?
$1,625
A certain investor wants an 11% return on investment from any real estate investment. A property priced at $360,000 has gross income of $60,000 and expenses of $22,000. Approximately how much too high or too low is the price of this property for the investor to obtain her desired return exactly?
$15,000 overpriced
Brokers are required to keep all trust account records for at least...
(D) 6 years
When must a broker hold on to a salesperson license?
(D) At all times
Which of the following properties are regulated under NJ real estate sales full disclosure act?
B - Timeshares
When a licensee is sued by the Federal Trade Commission, it is usually for
Violating antitrust laws
a buyer representative locate a suitable property through an owner broker. The buyer buys the property, the seller pays a commission, and the two agents split the commission. In this instance, the owner broker is acting as A) a single agent for the owner B) a dual agent C) a sub-agent of the buyer's representative D) a co-operating agent
a
a property owner in a development is required to have a shake roof. This requirement is most likely to come from A) a deed restriction B) a zoning ordinance C) a building code D) a condominium declaration
a
a sale contract contains a one-month financing contingency to allow the buyer to procure a loan. 32 days later, the buyer still has no loan committed commitment. At this point the seller may A) put the property back on the market B) sue for specific performances C) retain the buyer's deposit D) sue the lender to commit to a loan under fair financing laws
a
a seller accepts a buyer's counter-offer and mails the accepted contract to the buyer two days after receiving it. Because of confusion in the post office, it takes four days for the accepted contract to reach the buyer. In the meantime, the buyer's offer has expired. Which of the following is true A) the buyer is bound to the contract B) the buyer has no obligations to the seller whatsoever C) the buyers counter offer expired before it was accepted D) the seller is no longer bound to the agreement
a
a special assessment tax differs from other tax levies in that A) properties that receive no benefits do not pay the tax the B) tax levy takes into account other ad valorem taxes paid C) less valuable properties with stand to benefit will pay proportionately lower taxes D) it creates involuntary Junior lien on the property
a
and deriving cash flow from net operating income A) debt service is subtracted from noi B) Debt Service is added to noi C) income taxes are added to noi D) cost recovery expenses is subtracted from noi
a
during the executory period Of a sales contract, the buyer enjoys which of the following interest A) Equitable Title B) legal title C) executory title D) equity of Redemption
a
exceeding the limits of the authority granted is a major risk in A) the fulfilling of listing agreements the B) development of policy manuals C) complying with fair housing laws D) cooperating with Brokers from other firms
a
the Veterans Administration Assistant numerous qualified mortgage loan applicants because it A) guarantees loans made by approved lenders D) issues loans made by approved lenders C) purchase loans made by approved lenders D) originates loans made by approved lenders
a
the most common kind of landlord default is A) failure to maintain the property and provide services B) selling the property without notifying the tenants C) entering the least premise without the tenant's permission D) death of the landlord
a
which of the following items are paid in arrears A) interest and taxes B) rent and interest C) insurance and interest D) rents and taxes
a
a business buyer wants to acquire a business and it's totality, introducing the business identity and All rights, obligations, liabilities, and assets. The type of transaction that would accomplish this aim is A) an asset sell B) a stock sell C) a proprietary lease D) a rights lease
b
a critical determinat of commercial and residential property demand in a market is A) availability of land B) employment C) existing supply of properties D) per capita income
b
a principal instructs an agent to inform any minority buyer that the property was just put under contract an hour ago and is no longer available. The agent refuses to comply. In this case A) the agent should exercise caution until the listing expires, then declined to renew it B) the agent has not violated fiduciary duties C) the agent is liable for breaching the listing terms D) the agent May sue the principal for discrimination and misrepresentation
b
a property abuts a non navigable stream. What does the owner own A) land to the low water mark B) underlying the land to the middle of the Waterway C) land to the high-water mark D) all water to the middle of the waterway
b
a property sells for $180,000 one year after it was purchased. If the annual appreciation rate is 10%, how much did the original buyer pay for it A) $162,000 B) $163,636 C) $180,000 D) $198,000
b
a strength of the sales comparison approach to value is that A) old as well as new sales data may be used in The Adjustment process B) the approach is based on the principle of substitution C) the approach is accurate with unique, special-purpose properties D) sale price can be compared in a neighborhood, since all enjoy the same approximate rate of appreciation
b
a tract of land is described as W 1/2 of the N 1/2 of the N/E 1/4 of section 16. What is its acreage A) 20 acres B) 40 acres C) 80 acres D) 160 Acres
b
an agent fails to discover crumbling wall board on the basement ceiling beneath a bathroom. The agent sells the property, and the buyer later Sue's the agent for not discovering and disclosing a clearly visible and obvious problem. In this case the agent A) may be guilty of potentially misrepresentation B) has an exposure to negligent misrepresentation C) can counter sue the buyer for not employing an inspector D) is not vulnerable, since the problem is not expensive to a correct
b
as an economic product, real estate is unique because A) it has appreciation value B) the demand must come to the supply C) it is quick to respond to supply-demand imbalances D) its appeal is predictable
b
at the direction of a seller's client, an agent tells a pregnant working woman that the property is not in a good neighborhood for a single woman, particularly if she regularly Works late hours. The neighborhood has an increasing crime rate, and people are moving out. What has this agent done wrong A) practiced Blockbusting B) engaging in steering C) committed negligent Misrepresentation D) nothing: an agent may show or not show any property if the client so Direct
b
how does the Equal Credit Opportunity Act affect property managers A) manager cannot charge higher rent to tenants because of the fact they have children B) managers must be consistent and nondiscriminatory and evaluating the credit worthiness of tenant applicants C) managers must make fair housing facilities available to handicapped persons D) manager must identify the owners of all funds in their keeping of others
b
in a lien theory state A) Lien are recorded and Trust as opposed to title record B) the lender records lien while the borrower retains title to the mortgage property C) liened properties are foreclosed by strict foreclosure D) trustees retain title during a mortgage period
b
in the past, borrower's were often surprised by unexpected financing cost and charges at closing. this situation has been largely corrected through disclosure requirements mandated by which of the following laws A) Equal Credit Opportunity Act B) truth in lending laws C) National disclosure procedures Act D) federal fair housing laws
b
in which of the following situations would fair housing laws allow discrimination A) the developer of a subdivision containing 50 single family homes refused to sell to families that have children B) a retirement community whose residents are all over 62 refuses to allow families with children to buy in the community C) a condominium Community refuses to allow married couples or persons older than 40 to buy a condominium unit D) a property owner who owns for small apartment buildings with six units each rented only to married couples
b
the nature and import of the agency relationship should be disclosed to the client A) prior to completing an offer B) prior to completing a listing agreement C) upon the initial contact with the person D) within 24 hours after completing a listing agreement
b
the president of a local bank wants to sell her home. She instructs an agent to inform a buyer moving to town that her bank, along with others, is about to curtail mortgage lending for the rest of the year. Hearing this, the buyer hurries to make a full price offer in order to get the loan application in before the freeze. The seller accepts the offer. This contract is A) enforceable B) voidable C) null D) valid
b
what is meant by opportunity cost when speaking of real estate as an investment A) the financing charge associated with borrowing money to invest in real estate B) the return an investor could reasonably expect to earn from competing Investments C) the full cost of acquiring an investment property D) the financial risk of the investment
b
what is the primary aim of a marketing program for a managed property A) to enhance the image of the property owner B) to find and attract the right kind of tenants C) to attract skill professional staff to the property D) to discourage current tenant from leaving the property
b
which of the following is included in the legal concept of land A) A corn crop B) a lake C) a felled tree D) an abandoned vehicle
b
5 liens have been recorded against a certain house, and the following order: First Mortgage, mechanics lien, second mortgage, real estate tax lien, special assessment lien. Which lien will be the last one to be paid from the proceeds of the sale of the house A) special assessment lien B) mechanics lien C) second mortgage lien D) real estate tax lien
c
a $300,000 loan has monthly payments of $2,000. Its annual interest rate is A) 4% B) 6 % C) 8% D) 10%
c
a condominium estate is distinguished by A) ownership of a share in an association and a condominium lease on the owned unit B) Tenancy in common interest in airspace and common areas of the property C) fee simple ownership of a unit and an undivided share of the common area D) fee simple ownership of an equal share of the entire property
c
a landlord agrees to pay a broker for procuring a tenant unless someone else finds the tenant first. This is an example of a A) exclusive right to sell agreement B) exclusive agency agreement C) open listing D) net listing
c
a major employer relocates, leaving many homes in the area vacant and unmaintained. This is an example of A) physical deterioration B) functional obsolescence C) incurable economic obsolescence D) curable external obsolescence
c
all Licensing and Regulatory matters in Michigan including the real estate profession are administered by the A) Bureau of Professional Licensing B) real estate division C) Department of Licensing and Regulatory Affairs D) Department of regulations
c
highest and best use of a property is that use which A) involves the highest permissible structure and yields the best income B) is economically feasible, and give the developer the best return C) is legal, physically and financially feasible, and most productive D) complies with the area's master plan and is best for the community
c
if rents are declining in office properties in a market, it is likely that A) unemployment is decreasing B) the market is in equilibrium C) Supply exceeds demand for space D) demand exceeds supplies for space
c
in according with the statute of frauds A) leases in excess of one year must be recorded to be enforceable B) oral leases are not enforceable C) a five-year lease must be in writing to be enforceable D) an Unwritten lease is fraudulent
c
in evaluating a loan application, a mortgage lender is most concerned about A) the loan interest rate and loan term B) the property location in the amount of the borrowers down payment C) the applicants Financial capability and the value of the collateral D) the applicants credit history and background
c
the risk management strategy that aims to decrease the profitability or the severalty of a potential loss is called A) risk retention B) risk avoidance C) risk reduction D) risk transference
c
to shift some of the risk inherent in recommending vendors to Consumers, a licensee is advised to A) recommend only one well-known vendor and tell the consumer that the licensee vouchers for that vendor B) recommend only vendors who are willing to share their fee with the licensee C) present a broad range of choices and allow the consumer to make the selection D) recommend a different Bend or to each consumer clients
c
when a licensee is sued by the Federal Trade Commission, it is usually for A) acting without a license B) failing to follow correct renewal procedures C) violating antitrust laws D) violating fair housing laws
c
which of the following is true of a homestead A) a homestead interest can be conveyed by one spouse B) a homestead interest cannot be exempt from creditors C) a homestead interest is a form of legal life estate D) a homestead is any privately owned single family residence
c
while a property is under a contract for deed, the buyer, or vendee, takes possession of the property and makes timely payments of principal and interest. At the end of the term, the vendee attains a Loan and uses the funds to pay off the vendor. given the circumstances, what option does the seller have A) he may cancel the agreement because of an improper financing agreement B) he may extend the vendees lease term since timely payments were made C) he may offer to repurchase the property after conveying title D) he may exercise the right to retain the deposit as liquidated damages
c
3 people have identical rights in a property, share and indivisible interest, but may sell or transfer their interest without consent of the others. This type of ownership is A) joint tenancy B) tenancy by the entireties C) estate in severalty D) tenancy in common
d
a broker and salesperson agrees to a 40-60 commission split. This commission rate A) must be within guidelines set by state regulations B) must be approved by the listing client C) is probably the result of an agreement with other brokers D) is probably a reflection of competitive commission rates
d
a kind of insurance that provides coverage for loss resulting from the criminal acts of an employee is A) workers compensation B) consequential loss C) liability D) surety bond
d
a master plan can best be described as A) an annual review of all building permits and zones B) a forecast of existing land use patterns in a market C) a plat of subdivision preceding the design of the land use development D) a fusion of land use law and local land-use objectives and strategies
d
an important function of the secondary mortgage Market is to A) borrow funds from bank so the banks can make more loans B) issue tax certificates and sell them to primary lenders C) purchase pools of defaulted loans from the lenders to keep them solvent D) sell mortgage-backed Securities in order to buy pools of loans
d
commingling is the practice of A) mixing deposits from multiple transactions in a single account B) mixing agents Commission with funds for operating expenses of the agency C) appropriating client or customer deposits for use in the agency's business D) mixing escrow funds with the Brokers operating funds
d
one investment advantage of owning a principal residence is that the owner may be able to A) deduct mortgage interest and principal B) deferred depreciation expenses C) deduct Capital gain when the property is sold D) defer capital gain tax
d
the function of a Board of Equalization is to A) equalize mileage rates among taxing districts B) adjust ad valorem taxes in according with a household income C) adjust assessed value so that most property owners have nearly equal tax bills D) minimize wide discrepancies of assessed values within the district
d
the primary Jeopardy of overpricing a property is that A) the tax rate will be higher for the client B) buyers are put at an unfair disadvantage C) the agent stands to lose a commission D) the client's expectations may not be achieved
d
two important tasks in identifying value through the cost approach are A) estimating the cost of the land and its Accured depreciation B) estimating the value of the improvements in the obsolescence of the land C) estimating the cause and depreciation of the land and improvements D) estimating the cost of the land and the depreciation of improvements
d
under a special agency agreement, a broker is not authorized to A) schedule open houses B) advertise the property using the name of the brokerage C) discuss price adjustments with the principal D) execute a contract for sale agreement
d
Spenser, who works for selling broker Smith, sells a house listed by listing broker Adams. The house sells for $425,000. The co-brokerage split between Smith and Adams is 50-50. Spenser is on a 65% commission schedule with Smith. If the total commission rate is 7%, what is Spenser's commission?
$9,669
A NJ Broker who works for another broker is called a...
(D) Broker Associate
a tax rate is derived by A) dividing the tax requirement by the tax base B) multiplying the tax base times the tax requirement C) subtracting other sources of revenue from the total budget of the taxing district D) dividing the tax base by the tax requirement
a
which of the following items would affect a homeowner's adjusted basis A) installing a new furnace B) replacing a washing machine C) stripping and sanding hardwood floors D) replacing a broken picture window
a
an easement by prescription requires that A) the used be continuous, known, and permitted by the owner for a period Of time B) the used to be continuous, open, and hostile for a required period Of time C) the owner of an adjoining property be landlocked D) the owner of the affected property be an adverse possessor
b
the taxable income from an investment property is estimating by using which of the following formulas A) cash flow minus depreciation B) net income plus depreciation C) net income minus Debt Service D) net income minus interest and depreciation
d
unintentional misrepresentation is generally considered A) an accident that requires no punishment B) the same as fraud C) more serious than intentional misrepresentation because it demonstrates a lack of professional competence D) less serious than intentional fraud but still a violation to be punished
d
what are the dimensions of a Township A) 1 Mile Square B) 6 miles by 1 mile C) 1 mile by 1 mile D) 6 miles by 6 miles
d
A principal residence is bought for $180,000. A new porch is added, costing $7,000. Five years later the home sells for $220,000, and the closing costs $18,000. What is the homeowner's capital gain?
$15,000Gain = amount realized ($220,000 - $18,000) - adjusted basis ($180,000 + $7,000) = $15,000.