Sales General Exam - Stringham Real Estate School

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If a property was worth $233,087 two years ago and it appreciated at the rate of 6% each year, how much is it worth now? (a) $259,633 (b) $261,057 (c) $261,897 (d) $263,942

$261,897 Explanation: Don't say: two years at 6% = 12%, so $233,087 x 12%. It appreciated 6% each year (in other words, it compounded). So original value x 6% and add the two (or multiply by 106% for one step). That gives you the value after one year. Take that new value and do it again.

A straight loan has monthly interest payments of $738.02. The interest rate is 7.67%. What is the amount of the principal? (a) $118,934.89 (b) $130,698.98 (c) $124,362.08 (d) $115,465.97

$115,465.97 Explanation: All loan problems: Loan is FIRST interest is RATE and interest payment is LAST. Just remember, interest % is annual so you may have to adjust the interest dollars to be annual because R equals L. So take the $738.02 monthly interest times 12 to annualize it. Then "divide the one below the line by the one above the line" or $8,856.24 divided by 7.67% = the principal (original loan or current balance).

A sporting goods store had a lease agreement to pay 1.75% on all income over $56,000 a month gross in addition to the base rent they paid of $2,000. Last year they paid $56,500 in rent. What was their total gross income? (a) $2,529,143 (b) $1,368,321 (c) $1,857,143 (d) $1,954,330

(a) $2,529,143

Tim gets a 80% loan on a $100,000 property and is charged a 1 point origination fee. He is also charged a $35 credit report fee and a $450 appraisal. How much must Tim come to settlement with to then close the deal? (math question) (a) $21, 285 (b) $1,285 (c) $100,485 (d) $1,485

(a) $21, 285

T would like to purchase property from F. T sits with his agent and fills out a proper REPC. Which of the following COULD NOT be used as an earnest money deposit? (a) A handshake and a verbal agreement to cut a check later. (b) A written IOU made out by T to F for $100. (c) T's personal property. (d) T's pet pig, Wilbur.

(a) A handshake and a verbal agreement to cut a check later. T may give anything of perceived value/consideration to the seller to complete a valid contract. This includes personal property such as gold bricks, a check and yes even his pet Wilbur. It does have to be escrowed though... where would you escrow Wilbur?

Using the sales comparison method, if a subject property had an extra full bathroom ($6,000) that the comparable property did not, but was on a less desirable lot ($5,000), the proper adjustment would be: (a) Add $1,000 to the comparable property. (b) Add $1,000 to the subject property. (c) Add $11,000 to the comparable property. (d) No adjustment necessary.

(a) Add $1,000 to the comparable property. Explanation: A characteristic such as having an extra bathroom in the subject property is the same as saying the comparable is inferior so you would add $6,000 to the price of the comparable. Since the subject's lot is not as good as the comparable's lot, that means the comparable is better so you subtract $5,000 from the comparable's price. The net effect is to add $1,000 to the comparable.

An exercised option is called a: (a) Express Contract (b) Bilateral Contract (c) Unilateral Contract (d) Is not considered a contract

(b) Bilateral Contract

In order to begin the process of obtaining a VA loan, the applicant must provide what document? (a) Certificate of Reasonable Value (b) Certificate of Eligibility (c) Certificate of Authenticity (d) Eligibility Waiver

(b) Certificate of Eligibility Past and present armed servicemen & women need to request a certificate of eligibility which is provided by the Department of Veterans Affairs.

You present an offer from a qualified, willing and able minority buyer. The seller refuses to sell because the individual is a minority. You can legally do all the following EXCEPT: (a) Inform HUD. (b) Do not show this house to any other minorities. (c) Make the buyers aware they could possibly sue the seller. (d) Tell the owners they are in violation of Fair Housing Laws.

(b) Do not show this house to any other minorities.

The Federal Housing Administration is a mortgage lender allowing home ownership with little down payment. (a) True (b) False

(b) False

A uniform land contract could best be described as a: (a) Trust Deed and Note (b) Installment Contract (c) Real Estate Purchase Contract (d) Listing

(b) Installment Contract (Mortgage Law) Its four names are: Uniform Land Sales Contract, Installment Sales Contract, LandContract, and Contract for Deed. It is used in seller financing.

Which of the following statements is NOT applicable to a holographic will. (a) It can convey any kind of property. (b) It cannot convey real property. (c) It can designate who will raise the minor children.

(b) It cannot convey real property. (Deeds & Transfer) This is a will in the handwriting of the testator (hence, "in writing"), and thus, can convey real as well as personal property.

Which of the following statements is FALSE about conventional loans? (a) Congress establishes the loan limits each year for 1-to-4-family structures (b) Lenders may not establish their own underwriting standards (c) A non-conforming loan can be sold in the secondary market (d) The GSE's dominate this market category

(b) Lenders may not establish their own underwriting standards

When a remainder estate is involved, what owner interest is involved? (a) Joint tenancy (b) Life Estate (c) Ownership in severalty (d) Community property

(b) Life Estate

Certain defaults, unfortunately, happen quite often and so they are planned for and consequences outlined in the contract. An example is the earnest money deposit. This is: (a) Pur autre' vie (b) Liquidated damages (c) Hypothecation (d) Subrogated damages

(b) Liquidated damages

When the Federal Reserve increases the supply of money, it: (a) Gives more purchasing power to people by raising the interest rates. (b) Lowers interest rates and gives more purchasing power to people. (c) Almost always leads to higher demand for money, so the net effect is small. (d) Helps lower prices and places a restraint on inflation.

(b) Lowers interest rates and gives more purchasing power to people During times of recession, the Federal Reserve would like to give more purchasing power to people, and so it increases the supply of money and works to lower interest rates.

A property description that uses angles and degrees is referred to as: (a) Government survey (b) Metes and bounds (c) An informal description (d) Lot, block, and plat

(b) Metes and bounds

A sales agent in Utah negotiated an offer on an old home which had problems with the electrical system. The agent did not make an inspection or suggest one be done. The seller says everything works. When the buyer asked, the agent said, "Everything's in good working order." The sales agent is guilty of: (a) Nothing, because of what the seller said (b) Not exercising reasonable care (c) Nothing, because of the fiduciary relationship to the seller (d) Nothing, because there was no intention of misrepresentation

(b) Not exercising reasonable care

In a loan, an alienation clause: (a) Insures that there will be no late payment of principal (b) Protects the mortgagee's position (c) Protects against illegal aliens obtaining valid ownership (d) Insures taxes will be paid

(b) Protects the mortgagee's position The alienation clause says the loan will be paid off if the property is sold. My son just got a loan for 4.5%. Time passes and rates go up to 15%. The lender wants protection that when the house is sold the new buyer will have to get a new loan at current rates, not keep the 4.5% going.

Once the appraiser calculates the adjusted prices of all the comparables, the final step for developing a single estimate of market value is called: (a) Gather data and investigate. (b) Reconciliation. (c) Weighted substitution. (d) Highest and best use.

(b) Reconciliation.

What is the right of a mortgagor to regain clear title to the property upon full payment of the debt after the foreclosure sale? (a) Release (b) Redemption (c) Reversion (d) Reinvestment

(b) Redemption

Which broker action is an example of blockbusting? (a) Directing people to an area based on race (b) Soliciting listings based on a fear of racial change in an area (c) Refusing to rent to families with children (d) Refusing to sell or rent to prospects because of race

(b) Soliciting listings based on a fear of racial change in an area

In the list below, which item does NOT belong with foreclosure under a trust deed? (a) Equitable period of redemption (b) Statutory period of redemption (c) Three months (d) Special warranty deed

(b) Statutory period of redemption

K and N owned homes in the same subdivision, bought the same year and the same size lot and type of floor plan. K found out N's taxes were $480 less. Where would K appeal to get lower taxes? (a) The Board of Adjustment (b) The Board of Equalization (c) The County Recorder's Office (d) The Division of Real Estate

(b) The Board of Equalization

Progression and regression are considered "sub-principles" relating to overbuilding for an area, or purchasing the least expensive model home in a development of new homes. The main principle involved is: (a) Contribution (b) Competition (c) Cycle of Change (d) Conformity

(d) Conformity

The appraisal approach that determines value by adding the value of land to the depreciated replacement value of the improvement is the: (a) Income approach (b) Market data approach (c) Gross Rent Multiplier (d) Cost approach

(d) Cost approach This is the cost approach -- the only one to separate the value of the land. What would it cost to rebuild, minus depreciation, then add the value of the land.

For the purpose of property taxes, an appraisal is done and the value is determined by the: (a) County Tax Appraiser's Office (b) State Appraisal Board (c) Board of Equalization (d) County Tax Assessor

(d) County Tax Assessor

Which of the following terms is NOT applicable to an adjustable rate mortgage? (a) Index (b) Cap (c) Margin (d) Discount

(d) Discount Explanation: Discount in relation to loans applies when an investor buys an existing loan for less than its face value.

Each of the following are stated goals of the Federal Reserve System EXCEPT: (a) Ensure the safety and soundness of the nation's banking and financial system. (b) Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more profitable mortgage interest rates. (c) Manage national monetary policy to help achieve full employment and stable prices. (d) Protect credit rights of consumers.

Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more profitable mortgage interest rates Explanation: The Federal Reserve's responsibilities fall into four general areas: 1- conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices 2- supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers 3- maintaining the stability of the financial system and containing systemic risk that may arise in financial markets 4- providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments systems

Which of the following is NOT an approach to appraising? a. Income b. Comparison c. Plottage d. Cost

c. Plottage

An apartment building with 12 units has 6 covered parking spaces all of which are assigned a handicapped tenant moves in. which of the following is true? a. the owner must make provisions so the handicapped person can have a parking place. b. under no circumstances does a parking space have to be provided if the owner doesn't want to do it c. the handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property d. the owner must add additional space if one isn't available

c. the handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property

Tom is asking 100k for his home. Kyle calls and offers full price over the phone tom accepts the offer this contract would be considered a. unilateral b. void c. unenforceable d. voidable

c. unenforceable

When someone makes a statement to a qualified official that they freely and voluntarily executed a deed or document: a. certification b. recording c. habendum d. acknowledge

d. acknowledge

The seller s was agreeable to listing the house and paying a commission if a real estate agent found a buyer however s wanted to be able to avoid a commission if a neighbor bought the house what would accomplish this for s a. an exclusive right to sell contract b. a limited agency agreement c. a single party exclusive right to sell d. an exclusive agency contract

d. an exclusive agency contract

The difference between present value and reproduction cost is: a. Market Value b. Depreciation c. Book value d. appreciation

d. appreciation

A person who receives a gift of real property in a will is called the: a. Mortgagor b. Testator c. Grantor d. Devisee

d. devisee

Which of the following best describes a fixture a. bolted down barber chair b. physical items used in a business that may or may not be attached c. a crop nurtured in the year of the transfer d. that which is attached without losing its identity

d. that which is attached without losing its identity

Under an agreement of sale the seller is considered the a. mortgagor b. devisee c. grantee d. vendor

d. vendor

A broker found a ready willing and able buyer to purchase seller bonds house at the listing terms before agreeing to the sale seller bond introduced a new restriction stating that the sale could only be completed if the buyer agreed not to build a tennis court on the property the buyer refused and withdrew from the negotiations is the broker entitled to a commission a. no, because seller bond never accepted the buyers first offer b. yes, because the seller can change the terms in a listing agreement any time he wants c. no, because the buyer did not complete the purchase d. yes, because the broker had fulfilled the listing contract and must be paid

d. yes, because the broker had fulfilled the listing contract and must be paid

A written real estate contract is best described as which of the following? (a) An Express Contract (b) Voidable (c) Based on contingencies (d) Unilateral because the buyer can cancel

(a) An Express Contract Written contracts are categorized as express contracts because they use words to create the agreement. Although the buyer has the rights to cancel based on certain potential contingencies that does not make the contract Unilateral. Unilateral contracts are those that only one party is bound to based on the performance of the other.

The Real Estate Purchase Agreement states that the refrigerator is to go to Jack, the buyer. How should Jack be able to show he owns the refrigerator? (a) Bill of Sale (b) A certificate of sale (c) The statement on the purchase agreement (d) The deed

(a) Bill of Sale

An essential element of a deed is __________, which can be stated in terms known as valuable (monetary) or good (love and affection). (a) Consideration (b) Witnesses and a notary (c) The granting clause (d) Habendum

(a) Consideration

Filing documents such as deeds, easements, and mortgages in the public record is known as: (a) Constructive notice or delivery. (b) Right of disclosure. (c) Filing an opinion of title. (d) Actual notice.

(a) Constructive notice or delivery. (Deeds) Deeds, liens and other property claims are recorded in the public record so that the history and background of a property can be researched. This is known as giving constructive notice.

All of the following statements are true about the Cost Approach to valuation EXCEPT: (a) Depreciation is calculated for the buildings and land to reflect the three different types of depreciation (loss in value) to the subject property. (b) The cost to rebuild or replace the structure and other land improvements is calculated using today's construction costs. (c) The land is valued separately from the structure and site improvements. (d) The final result when adding the total cost to replace the subject property (land plus improvements) minus the approximate depreciation is a fair estimate of market value for the subject property.

(a) Depreciation is calculated for the buildings and land to reflect the three different types of depreciation (loss in value) to the subject property. The cost approach to valuation is another method for estimating the market value of the subject property. It approximates the value a potential buyer might experience if he/she was to build a structure similar to the subject property on a vacant parcel. The cost approach to appraisal uses these steps:1- The value of the site (land without any man-made structures) is calculated, usually through the sales comparison approach.2- The value of all the man-made improvements which have been applied to the land is calculated by looking at how much it will cost to replace or rebuild those improvements based on today's building codes, materials and prices. 3- The amount of the depreciation on the existing improvements is subtracted from the calculated value of the improvements calculated in item #2 above.4- This figure is added to the value of the site.

Q decides to rent a single family home. The agreement prohibits the tenant from assigning or subletting. Which right in the Bundle of Rights does the tenant NOT share in? (a) Disposition (b) Quiet Enjoyment (c) Possession (d) Use and Control

(a) Disposition The tenant has the bundle of Quiet Enjoyment, and Possession, as well as a few sticks from Use andControl, but does not have sticks from the bundle of Disposition.

Which arrangement may occur in a typical construction loan? (a) Funds are paid in installments at various stages of construction. (b) The full loan is advanced before construction begins. (c) Interest on the total amount of the loan is charged from the beginning. (d) Funds are given after construction is completed.

(a) Funds are paid in installments at various stages of construction. By paying out the loan amount in small increments as the funds are needed it reduces the lender's risk and reduces the interest needed to be paid by the builder.

The key difference between a lien theory state and a title theory state is: (a) In a lien theory state, the property owner holds title but in a title theory state the lender or trustee holds title. (b) In a title theory state, the property owner always holds title. (c) Only a lien theory state uses legal documents to convey property rights. (d) A title theory state will collect more transfer taxes because of the extra steps.

(a) In a lien theory state, the property owner holds title but in a title theory state the lender or trustee holds title.

You can deduct loan interest in which of the following circumstances? (a) On your house and your motor home. (b) Points on a home equity loan incorporated into the loan. (c) The automobile used to travel to and from work. (d) Credit card debt used for improving your home.

(a) On your house and your motor home.

When a listing is taken how does the agent confirm the amounts owed on the mortgages? (a) Order an Estoppel Certificate. (b) The seller must list all lien amounts on the Seller's Proceeds Sheet. (c) The listing agent should personally contact all lien holders and verify balances. (d) Have the title company verify balances.

(a) Order an Estoppel Certificate. Estoppel Certificate is a formal term describing the document that the lender provides accounting for the total amounts owed. Agents should not be personally gathering this information. Agents should advise their clients to personally verify the amounts on the Estoppel Certificate.

Which of the following is NOT true about a sale and leaseback of a commercial property? (a) Ownership does not actually transfer (b) Seller frees up funds (c) Buyer can deduct depreciation from his taxes (d) Seller is able to deduct rent payments from his gross income

(a) Ownership does not actually transfer

The Y Co. needed a large parcel of land to relocate their business. They found two parcels next to each other priced at $80,000 and $95,000 and purchased them both. Subsequently they found a better site and sold the two parcels to one buyer for $205,000. This illustrates the concept of: (a) Plottage (b) Assemblage (c) Situs (d) Neighborhood Cycle

(a) Plottage The combined value of the two was $175,000. If the single parcel had sold for that, it would have been assemblage. But because the combined value was worth more, that is plottage.

Easements, rights of ingress and egress and other rights and privileges which pass with the title of real estate are called: (a) Licenses (b) Appurtenances (c) Emblements (d) Habendum

(b) Appurtenances Explanation: (Property) Appurtenant means anything attached to the property, either physically (the house) of by deed (the easement). Habendum is a clause in a deed; emblements are crops nurtured in the year of the sale; and license is an interest in real property which is temporary and involves no ownership.

The key difference between a promissory note and a mortgage is: (a) Promissory notes are signed by people personally obligated to repay the loan. (b) A promissory note can be assumed by a new property owner. (c) A mortgage is signed by anyone obligated to repay the loan. (d) There are no personal guarantees on a promissory note.

(a) Promissory notes are signed by people personally obligated to repay the loan. Explanation: (Mortgage Law) The Promissory Note represents a personal promise by every one who signs the Note to repay the loan. Every person who signs the Note individually promises to repay the entire amount regardless of how well the other signers meet their personal obligations.

S was three years into a five-year lease and wanted to move elsewhere. T was willing to sublet the property. Which is true? (a) S could increase the rent and make a profit. (b) S has no further liability for rents or damages. (c) T is the only one who could be liable for damage to the property. (d) T pays rent directly to the owner.

(a) S could increase the rent and make a profit.

M took a listing. Which of the following situations best describes the concept of designated agency? The contract states: (a) The broker and M will represent the seller. (b) The broker and all agents in the office will represent the seller. (c) All agents in the office will be designated as limited agents. (d) The broker is a limited agent and M represents the seller.

(a) The broker and M will represent the seller. When a listing OR a buyer-agreement is first signed, we are only dealing with one party, so limited agency is only a possibility at this point. If everyone in the office represents the seller or buyer, that would be subagency.

Agent G was going to leave XYZ Real Estate and go to ABC Realty. G's great-aunt had listed her house and wanted G to still be her agent. Which of the following answers would accomplish this in accordance with the law? (a) The broker of XYZ agrees to cancel the listing. (b) Everything stays the same and G continues to service her aunt's listing. (c) The listing has to stay with XYZ and the aunt will be assigned a new agent. (d) The listing is assigned from XYZ to ABC (a) The broker of XYZ agrees to cancel the listing.

(a) The broker of XYZ agrees to cancel the listing.

Who gives the lender the mortgage and note? (a) The mortgagor (b) The mortgagee (c) The trustee (d) The fiduciary

(a) The mortgagor

Which thing on the list that follows would NOT be an item addressed in the property management contract between the broker and the owner? (a) The rents to be charged (b) The commission structure (c) The work schedule of the agents (d) The responsibilities of the agent

(a) The rents to be charged

When an apartment building is sold, how should the renters' security deposits be handled on the HUD 1 statement? (a) They will be a debit to the seller and a notation in the buyer's credit section. (b) They will appear as a debit to the seller and a credit to the buyer. (c) They will not be noted in the settlement statement. (d) They will be a debit to both since they belong to the renters.

(a) They will be a debit to the seller and a notation in the buyer's credit section.

Any offer without an Earnest Money Deposit is considered which of the following? (a) Valid (b) Unilateral (c) Unenforceable (d) Implied

(a) Valid Earnest Money is not a requirement to have a valid offer. The confusion happens when we view the Earnest Money Deposit as the consideration in the contract. The consideration is the promise to pay the sales price not the Earnest Money Deposit.

M starts a small business teaching people how to do unique types of quilting and stitchery and hires one person to help her. She finds an old house to rent cheaply. It only has one very small 1/2 bath, and five steps to get in the front door. In this case, ADA requirements: (a) are violated because a handicapped person would not have equal access. (b) only apply when there are more than 15 employees. (c) don't apply as it would be too costly for a small business to make major construction modifications. (d) do not apply since there's only one employee.

(a) are violated because a handicapped person would not have equal access.

A bulletin board was built into the wall in the kitchen of a personal residence. If a buyer wants it, he should realize that the bulletin board: (a) will automatically remain with the property at the time of conveyance since it is real property. (b) must be listed on the deed. (c) must be exempted in the listing by the seller. (d) must be excluded from the personal property listed in the trust deed.

(a) will automatically remain with the property at the time of conveyance since it is real property. (Property) The whole purpose of the REPC is to transfer ownership of the real property identified at the beginning of the contract. The built-in items are fixtures, therefore real property, therefore included in the sale.

The buyers insisted they were not interested in a property that was less than 1.75 acres in size. A house on a property that was 465 feet by 643 looked great. How many acres does it have? (a) 5.75 (b) 6.86 (c) 7.25 (d) 4.5

(b) 6.86

A home listed with ABC Realty sold for $168,500. If the closing costs were $3,825 and the commission was $11,795, what was the rate of commission? (a) 7.16% (b) 7% (c) 6.80% (d) 7.25%

(b) 7%

When selling real estate, contracts must be in writing: (a) If advised by the real estate agent. (b) According to the Statute of Frauds (c) Unless the deed is to be recorded (d) If agreed to by the buyer and seller

(b) According to the Statute of Frauds

The income capitalization approach for valuing real estate depends on each of the following elements EXCEPT: (a) Operating income data for similar properties. (b) Accurate depreciation information. (c) Recent sales data on similar properties. (d) A property that generates a verifiable stream of operating income.

(b) Accurate depreciation information. The income capitalization approach to property valuation is useful when an appraiser can calculate the ratio of net operating income (NOI) to the sale prices of similar properties to derive a capitalization rate. Then the appraiser applies that capitalization rate to the calculated NOI of the subject property to develop a likely sales price.

When the two parties agree in writing to have the agent act as a limited agent, most fiduciary duties still apply. But the principals are giving up something. Which best describes the change in fiduciary duties under limited agency? (a) There are limitations on the duty of obedience required from the agent. (b) The loyalty duty for single agents is replaced with neutrality. (c) Loyalty obligations now include both buyer and seller. (d) The full disclosure duty has been expanded to include both parties.

(b) The loyalty duty for single agents is replaced with neutrality.

Which is true regarding FHA loans? (a) You will get an FHA loan regardless of your credit history. (b) There are no prepayment penalties. (c) FHA would be used to originate a conventional loan. (d) FHA standards require a substantial amount as a down payment.

(b) There are no prepayment penalties.

The contract entered into between the principal broker of an office and the sales agents is usually which type of contract? (a) Bilateral (b) Unilateral (c) Qualified (d) Defeasible

(b) Unilateral

Which of the following is an issue with trade fixtures? (a) Historical significance (b) Vital to the business function (c) Fits the decor theme (d) Physically attached

(b) Vital to the business function (Property) Trade fixtures may or may not be physically attached. They are "attached" to the business itself, not the real property.

Truth in Lending or Reg. Z includes all the following requirements EXCEPT: (a) Advertising restrictions (b) Your Home Loan Toolkit (c) Disclosure of costs (d) Use of APR

(b) Your Home Loan Toolkit

The difference between present value and reproduction cost is: (a) market value (b) depreciation (c) appreciation (d) book value

(b) depreciation

We refer to an FHA insured loan and a VA ________ loan (a) gifted (b) guaranteed (c) no down payment (d) entitled

(b) guaranteed

Broker L listed a home that sold for the full price of $325,000. The contract called for a 6.5% commission. How much did Broker L make? (a) $20,250 (b) $23,500 (c) $21,125 (d) $18,500

The commission structure for the brokerage was 5% on the first $1,000,000 and 8% on the rest. The property sold for $1,345,000. How much was the commission? (a) $97,250 (b) $67,250 (c) $77,600 (d) $174,850

(c) $77,600 (Explanation: One million x 5% = part of the commission - $50,000. "The rest," or $345,000 x 8% = $27,600. Add the two parts together for the correct answer.)

Tom wants to clear $90,000 when he sells his property. He must pay a 7% commission, $250 in closing cost, and $300 to the attorney who assisted in the transaction. What should he sell the property for? (a) $96,850 (b) $96,774 (c) $97,365 (d) $97,324

Which of the following would NOT be considered to have special agency? (a) A real estate agent who takes a listing on a single family dwelling. (b) An agent who is given the responsibility to seek a ready, willing, and able buyer. (c) A real estate agent given the responsibility to take care of all of the seller's real estate matters. (d) A real estate agent who has an exclusive right-to-sell listing on a home.

(c) A real estate agent given the responsibility to take care of all of the seller's real estate matters Special=specific agency: the agent is hired to perform specific duties. A universal agent takes care of all the affairs of the client.

Which of the following is NOT true regarding the income tax concept of depreciation. (a) Cost recovery is another term for depreciation (b) Straight line method is the only one allowed for real property. (c) A vacant lot can be depreciated when rented to people for gardens. (d) It does not result in "getting out of" paying taxes.

Using the sales comparison method, if a subject property had an extra full bathroom ($6,000) that the comparable property did not, but was on a less desirable lot ($5,000), the proper adjustment would be: (a) Add $1,000 to the subject property. (b) Add $11,000 to the comparable property. (c) Add $1,000 to the comparable property. (d) No adjustment necessary.

What does a VA loan have that an FHA loan does not? (a) A right of reinstatement (b) No prepayment penalty (c) An LTVR of 100% (d) Discount points

(c) An LTVR of 100% (Loan Types) The 100% applies to the appraisal or purchase price, whichever is less. It is also dependent upon the amount of eligibility the veteran has as shown in the Certificate of Eligibility.

An easement by prescription can best be described as: (a) An easement recommended by a doctor for a sick land owner (b) A right of way created for landlocked property (c) An adverse use (d) An easement created by eminent domain

D wanted to buy a home from K, but wouldn't buy it unless the pool table came with it. D and K decide that the pool table is personal property. What contract would be the best tool for the pool table purchase? (a) Pinky swear (b) REPC (c) Bill of Sale (d) Handshake and one hug

(c) Bill of Sale (Explanation: The pinky swear and handshake/hug might have worked in the past, but modern real estate agents will tell you the bill of sale is the way to go for the purchase of all personal property. If the purchase of real property is contingent on the acceptance of the bill of sale offer, it should be so noted on the REPC.)

The buyers walked into a model home of a builder. The agent of the seller/builder had them sign an unrepresented buyer form. Which of the following applies? (a) Habendum (b) Pur autre' vie (c) Caveat emptor (d) Estoppel

Which of the examples below is NOT an exception to the requirements of the Fair Housing Laws? (a) A church-owned apartment building that has always rented only to members, and lets anyone join their church (b) The owner of a single family home renting a bedroom, and who advertises: "Females only." (c) Condo complex that requires that everyone who buys or lives there must be at least 45 years old. (d) An owner of a triplex who lives in one unit and rents out the other two.

(c) Condo complex that requires that everyone who buys or lives there must be at least 45 years old. One tiny thing in one of the answers makes it not an exception to the law's requirements. The age is 62, not 45, for senior housing.

All of the following actions terminate a listing EXCEPT: (a) Abandonment by the broker (b) Death of the listing broker (c) Death of the listing salesperson (d) Death of the principal

(c) Death of the listing salesperson Because the broker is the actual agent, if the broker dies, no more contract. Subagent who took the listing dies, doesn't affect the contract. If the other principal to the contract, the seller, dies, no more contract.Abandonment by the broker could give the client legal cause to terminate the listing.

The borrower used a document which gave the trustee power of sale as the security for the loan to buy the home. What document would contain that power: (a) Trustee's Deed (b) Mortgage (c) Deed of Trust (d) Uniform Real Estate Contract

(c) Deed of Trust (Mortgage Law) This security instrument may be called a Deed of Trust or a Trust Deed: same thing. A mortgage is also a security instrument, but does not convey the power of sale and therefore requires court action. A trustee's deed is the deed given to the winning bidder who buys property at a foreclosure sale under a trust deed. A Uniform Real Estate Contract is a document used sometimes in seller financing.

When a person dies leaving no will and no heirs, the government will get the property by the process of: (a) Eminent domain (b) Quiet Title Action (c) Escheat (d) Police power

Which of the following relates to a deed: (a) Tax assessment (b) Personal property (c) Exceptions and reservations (d) Lien

This ad appeared in the newspaper. "Beautiful three bedroom home in Hispanic neighborhood. Owners moving to neighboring state. Purchase price $80,000, $1,500 down, $800/month, APR 6.5%." This ad would violate which of the following laws? (a) Truth in Lending (b) Interstate Federal Full Disclosure Act. (c) Federal Fair Housing (d) RESPA

(c) Federal Fair Housing You cannot advertise in a way that targets a specific protected class. Because all the loan terms were in the ad, the "APR" is not a TILA violation.

The two largest participants in the secondary market, referred to as government sponsored enterprises, that purchase mortgages are known as: (a) Ginnie Mae and Fannie Mae (b) Goldman Sachs and China (c) Freddie Mac and Fannie Mae (d) FHA and VA

(c) Freddie Mac and Fannie Mae (Lending Markets) Freddie Mac and Fannie Mae are the two largest secondary players that purchase mortgages. Ginnie Mae does not purchase mortgages.

Which of the following entities is only in the secondary mortgage market, and not in both primary and secondary? (a) Private individuals (b) Insurance companies (c) GNMA (Government National Mortgage Association) (d) Banks

A lien on real property, documented by a signed mortgage contract gives the lender the right to: (a) Collect a particular interest rate on the loan. (b) Collect monthly payments for insurance and taxes and place them in an escrow account. (c) Go to court and/or sell the property if the owner defaults any of the provisions of the mortgage (d) Sell the servicing rights to the loan to another investor.

The three tools used by the Federal Reserve to reduce the supply of money are: (a) Increase the reserve requirement, lower the 10-Year Treasury bond rate, raise the discount rate. (b) Increase enforcement of Regulation Z, raise the reserve requirement, buy securities in the open market. (c) Increase the reserve requirement, raise the discount rate, sell securities in the open market. (d) Sell securities in the open market, raise lending standards, raise the reserve requirement.

The best way to describe an appraisal is: (a) It represents the minimum value in which a lender would fund a loan. (b) It is a scientifically determined and universally accepted resale value for sellers. (c) It is an independent, objective opinion of market value at the time of the appraisal. (d) It represents the highest and best price a buyer should pay.

(c) It is an independent, objective opinion of market value at the time of the appraisal. Appraisers provide an independent, educated and experienced estimate of a specific property's value at a particular point in time. The buyer, and particularly the lender providing funds for the transaction depend on an objective, third party such as a licensed, state-certified appraiser to assign a market value to the property.

A property manager, in fulfilling his/her duties to the principal, would want to make sure there was an insurance policy in place to cover: (a) Mortgage (b) E & O (c) Liability (d) Workers' Compensation

The lender wanted a very thorough appraisal report for the shopping mall being considered for financing.Which type of appraisal report would accomplish that? (a) Check List (b) Survey (c) Narrative (d) Letter Form

(c) Narrative The "survey form" answer is not a real form. The other three are. The most extensive and one for commercial properties is the narrative report.

An up-front cost the lender charges to the borrower, usually a percent of the loan amount, that generates profit to the lender and factors in the lender's cost of getting money. (a) Discount points (b) Title insurance fee (c) Origination fee (d) Document prep fee

Which of the following is most like the "or more" clause in a loan: (a) Reappraisal clause (b) Graduated payment clause (c) Prepayment privilege clause (d) Index clause

(c) Prepayment privilege clause (Loan Types) You can pay the required payment, or that much and more. The other three choices are different ways of setting up the terms for increasing the required payment as time passes. The reappraisal option would apply to lease, not loan, payments.

A credit score: (a) Is a statistical average of willingness to pay future obligations. (b) Is a numerical estimate of borrower's ability to honor past obligations. (c) Represents the probability of a serious delinquency on an account over the next 24 months. (d) Represents Mr. Isaac's mathematical genius in predicting loan losses.

Which of the following is NOT a means of regulating land? (a) Zoning (b) Building codes (c) Resolutions passed by the local Board of Realtors (d) Deed restrictions

(c) Resolutions passed by the local Board of Realtors A professional organization of any kind does not have legal rights to put restrictions on the use of land.

E borrowed money from a bank for personal reasons. It had a fixed interest rate for a five year term. Monthly payments were interest only, and at the end, E owed the lender the full amount borrowed. This is which kind of loan? (a) Participation loan (b) Partially amortized loan (c) Straight loan (d) Purchase money

(c) Straight loan A partially amortized loan would have some of the balance paid off at the end. A purchase money loan is seller financing. A participation loan is one where the lender is also an owner.

G followed the steps of adverse possession, hoping to end up owning the property. Five years into it, he was transferred across the country. H picked up where he left off, completing the requirements to seven years. This is called: (a) Subrogation (b) Abandonment (c) Tacking (d) Severance

In which of the following situations involving a 1031 would income taxes NOT have to be paid? (a) The exchange of a boat which can be a residence for a single family home. (b) Exchanging a duplex and a car for a triplex (c) The exchange of a four plex in the city for a small farm of equal value. (d) The exchange of two properties resulting in one owner owing $5,000 less than before on the property loan.

(c) The exchange of a four- plex in the city for a small farm of equal value. (Taxation) The 1031 applies to "like for like" or real property for real property. Personal property involved would be taxable and mortgage or debt relief is taxable.

H gives a life estate to her mother's doctor, which states that the doctor will have the property for as long as"Mom" is alive. Mom is very healthy, but the doctor is now dead. What happens? (a) Mom's heirs get the property (b) Mom gets the property. (c) The property goes to the doctor's heirs (d) The property goes back to H.

Under the law of emblements, which of the following situations is true? (a) The buyer gets everything, and after harvesting the crop, gets the profits from it. (b) Everything goes to the buyer and the seller has no further rights to anything on the property. (c) The seller deeds the property to the buyer but has rights to the crop. (d) The buyer gets the land, the seller gets the farm house.

(c) The seller deeds the property to the buyer but has rights to the crop. (Property) The seller has the rights to the crops in the year of the transaction --it is the return on their investment.

A new Truth-in-Lending (TIL) disclosure must be provided: (a) Within 3 business days of discovering the annual percentage rate changed by more than 1/4% (b) Within 7 business days of discovering the annual percentage rate changed by more than 1/4%. (c) Within 3 business days of discovering the annual percentage rate changed by more than 1/8%. (d) At least 3 days prior to closing whether there has been a change in annual percentage rate or not.

(c) Within 3 business days of discovering the annual percentage rate changed by more than 1/8%. (TILA) A new TIL disclosure must be provided within 3 business days of discovering the annual percentage rate (APR) has changed by more than 1/8%.

The main purpose of Title III of the Americans with Disabilities Act is to: (a) provide employment opportunities for the disabled. (b) make sure a handicapped person has a place to live. (c) provide equal access to goods and services. (d) provide adequate parking spaces for those with disabilities.

If the net operating income of a subject property is $1 million per year and the capitalization rate for similar income properties in that particular market is 10%, what is its estimated value using the income capitalization approach. (a) Not enough information (b) $100,000 (c) $1,000,000 (d) $10,000,000

(d) $10,000,000

If the loan to value ratio is too high, the lender will want mortgage insurance to protect its interest in case of default and foreclosure sale. In almost all cases, what is the number that triggers mortgage insurance being paid? (a) 90% (b) 95% (c) 75% (d) 81%

(d) 81% (Loan Types) 80% LTVR or lower does not require mortgage insurance.

Which of the following would require a variance? (a) A business in an area that had recently been rezoned to residential. (b) An area between two varying types of zoning classifications to give protection to one of the areas. (c) A church in an area zoned for residential properties. (d) A 9,000 square foot lot where zoning regulations require 10,000 square foot lots.

(d) A 9,000 square foot lot where zoning regulations require 10,000 square foot lots.

Under a mortgage foreclosure, K made the highest bid and got the property. Within 24 hours K had paid the full amount to the sheriff. What would K receive? (a) A bargain and sale deed (b) A quit claim deed (c) A special warranty deed (d) A certificate of sale

(d) A certificate of sale (Mortgage Law) K will not receive the actual deed until the six month statutory period of redemption has passed and the defaulting borrower was unable to redeem the property. The other answers are all different types of deeds.

One of the more common methods for assessing property taxes is based on a percentage of the value of the property, also known as: (a) Market value taxes. (b) Assessed value taxes. (c) Proportionate contribution taxes. (d) Ad Valorem taxes.

(d) Ad Valorem taxes. (Property Tax & Title Insurance) Taxes that are calculated as a percentage of the appraised value of a property are called ad valorem taxes, meaning according to value.

A person lived on a property openly and notoriously under "color of title." This situation has to do with: (a) Fee simple defeasible (b) An owner who holds a quit claim deed (c) Easement by prescription (d) Adverse possession

(d) Adverse possession

A subordination clause in a loan would involve which of the following actions? (a) Abrogation (b) Abandonment by the borrower (c) Assignment to a new borrower (d) Alteration of priority

(d) Alteration of priority Explanation: (Loan Types) To become subordinate is to have a lower position, thus altering priority of a previous lien. Abrogation is a term that applies to title insurance.

An All-Inclusive Trust Deed is most closely related to all of the following EXCEPT: (a) A Uniform Real Estate Contract (b) Subject-To loan (c) A wraparound mortgage (d) Blanket mortgage

(d) Blanket mortgage Although the terms all inclusive and blanket sound similar, a blanket mortgage is used to purchase two or more parcels of land. The remaining options refer to the seller creating a new loan with a buyer while keeping the seller's original financing in place on a single property.

R sells property to T with the restriction in the sales agreement that T can only use the property for farming purposes. This is an example of: (a) Deed in lieu of . . . (b) Fee simple with a condition precedent (c) Fee remainder estate (d) Fee simple defeasible

(d) Fee simple defeasible There was no condition before (precedent) the granting of the deed. Deed in lieu of . . . Is a"friendly foreclosure." Anything talking about remainder interests involves a life estate. This situation is defeasible (translate defeasible). If the new owner stops farming, it goes back to the seller.

Which is not correct about PMI? (a) You may request PMI removal when the current loan balance equals 80% of the original purchase price or current appraised value, whichever is less. (b) To request cancellation of PMI, you must be current on your loan. (c) For "high-risk loans" lenders are required to automatically remove PMI when the loan balance reaches 77% of the original purchase price. (d) In order to remove PMI, the lender must receive a request from the borrower.

(d) In order to remove PMI, the lender must receive a request from the borrower. Once the loan balance has reached 78% of the original purchase price or current appraised value, the lender is required to automatically remove the PMI payment.

What role does the federal government play in regards to FHA loans? (a) Guarantees the first 25% of the loan value (b) Pre-qualifies borrowers based on need (c) Provides tax incentives for borrowers to make higher down payments (d) Operates an insurance program

(d) Operates an insurance program (Application & Underwriting) FHA operates a government-backed insurance program and for-profit, privately lenders process and close FHA insured loans.

P, who is 25, did not realize Q was only 17, and entered into a contract with Q. P no longer wants to go through with the deal, but Q does. Which of the following statements apply? (a) The contract is void if Q didn't have a co-signer. (b) This is definitely a voidable contract for P. (c) The contract is valid and binding on both P and Q. (d) P has no choice, but it is a voidable contract for Q.

(d) P has no choice, but it is a voidable contract for Q.

A loan is amortized as though for 25 years, but is due sooner and paid off in a balloon payment. This is known as a(n): (a) ARM (b) Gap loan (c) Straight loan (d) Partially amortized loan

(d) Partially amortized loan

A loan is amortized as though for 25 years, but is due sooner and paid off in a balloon payment. This is known as a(n): (a) Gap loan (b) Straight loan (c) ARM (d) Partially amortized loan

(d) Partially amortized loan When you think balloon, think partially amortized as well. Partially amortized means that there will be some principal left to pay after all scheduled payments have been made.

Q is willing to seller finance the purchase of his home which he owns free and clear. Q would be considered the: (a) Payor (b) Grantee (c) Leasee (d) Payee

(d) Payee

Automated underwriting systems offer the following benefits EXCEPT: (a) Immediate feedback for correcting deficiencies (b) Speed and low operating cost (c) Objective-free of discrimination (d) Reduced closing cost to borrower

(d) Reduced closing cost to borrower

An appraisal may be considered complete without which of the following? (a) Date (b) Property description (c) Signature (d) Sales approach

(d) Sales approach

Using the sales comparison method, the property adjustment for a comparable property that is viewed to be worth $10,000 more because it is newer would be: (a) Subtract $10,000 from the subject property. (b) Add $10,000 to the subject property. (c) Add $10,000 to the comparable property. (d) Subtract $10,000 from the comparable property.

(d) Subtract $10,000 from the comparable property. Explanation: A characteristic such as less wear and tear makes the comparable better so the value of that factor is subtracted from the comparable. Never adjust the price of a subject property.

Each of the following statements are true about a deed EXCEPT: (a) Grantor must sign the deed. (b) The deed must use a legal description to identify the property. (c) Grantor must be of legal age and sound mind but not the grantee. (d) The deed does not need to be in writing.

(d) The deed does not need to be in writing. (Deeds) A deed is a legal document that transfers rights of ownership from the grantor to the grantee. The deed must be in writing (formal document). The deed must contain the signature of a competent grantor who is of legal age. However, the grantee need not sign, be competent or of legal age. IT must have a legal description to identify the property and be delivered and accepted by the grantee.

J carried back a 2nd mortgage when his home was sold. Now he needs some ready cash and is going to sell it to a secondary lender for 60% of face value. This discounting of the loan does NOT have which of the following advantages? (a) It provides an increased yield for the secondary lender. (b) The secondary lender has a secured investment at relatively high interest. (c) It gets a lump sum of cash immediately for J. (d) The person who bought the house and has the loan will now pay a higher interest rate.

(d) The person who bought the house and has the loan will now pay a higher interest rate.

J carried back a 2nd mortgage when his home was sold. Now he needs some ready cash and is going to sell it to a secondary lender for 60% of face value. This discounting of the loan does NOT have which of the following advantages? (a) It gets a lump sum of cash immediately for J. (b) It provides an increased yield for the secondary lender. (c) The secondary lender has a secured investment at relatively high interest. (d) The person who bought the house and has the loan will now pay a higher interest rate.

(d) The person who bought the house and has the loan will now pay a higher interest rate. The sale of an existing loan at a discount does not have any impact on the borrower. If the face value is $10,000 and the holder sells it at a discount, he/she will receive less than $10,000 - but does get a lump sum of cash. The investor who buys at a discount gets an increased yield.

Which of the following statements is true of both Truth in Lending and RESPA regulations? (a) They cover loans to small businesses. (b) The booklet Settlement Costs & You must be given. (c) APR must be used in advertising. (d) They cover single to four-family dwellings.

(d) They cover single to four-family dwellings.

What is the risk to a lender who accepts a deed in lieu of foreclosure? (a) A deed in lieu of foreclosure is considered illegal. (b) The original borrower may be represented by a lawyer. (c) There must be a foreclosure to make the deed valid. (d) They would accept the deed subject to any junior liens.

(d) They would accept the deed subject to any junior liens. (Mortgage Law) This is a perfectly legal arrangement, but carries risks for the lender. It is sometimes called a "friendly foreclosure."

In a graduated lease contract, which of the following would NOT be a means to determine future rent amounts? (a) Escalation clause (b) Index (c) Reappraisal (d) Use of an ARM

(d) Use of an ARM (Leases) An ARM is an adjustable rate mortgage. All the other answers can be used to calculate raises in the rent.

Willful destruction or neglect of property which affects the rights of the remainderman is: (a) Succession (b) Sufferance (c) Vandalism (d) Waste

(d) Waste

In a listing contract, the seller agrees to: (a) fix any appliances that are broken. (b) sell the property. (c) sell only if a full priced offer comes in. (d) consider offers on the property

(d) consider offers on the property

Which of these contain only the essential elements of a real estate contract? (a) in writing, consideration, notarization (b) mutual consent, legality, consideration, recordation (c) in writing, capacity, acknowledgment (d) legal purpose, capacity, mutual consent, in writing

(d) legal purpose, capacity, mutual consent, in writing Remember the Roman numerals: M,C,C,L for any contract. Mutual agreement, mutual assent, mutual assent, meeting of the minds -- convenient they all start with "M." Consideration; capacity/competency; legal purpose. For a real estate contract, we also need it to be in writing. Each of the wrong answers has an item that doesn't belong on the list.

Title insurance is paid: (a) monthly. (b) as a part of the mortgage payment. (c) annually. (d) only once, at closing.

(d) only once, at closing.

What could happen if a property owner does not pay his/her property tax?

It may take several years but, the home could be sold at a county auction to recoup the taxes due.

M and N own a property together as tenants by the entirety. Which of the following is true about their ownership? (a) Neither M nor N can mortgage the property without the consent of the other. (b) M can sell his/her share without the consent of N. (c) If N dies before M, N's interest can be willed to N's heirs. (d) If M sells his/her interest, the new owner would become a joint tenant with N.

Neither M nor N can mortgage the property without the consent of the other. (Explanation: Tenants by the entirety have survivor ship, as joint tenants do. But there are two big differences. Under tenancy by the entirety, the parties must be married, and neither can sell nor encumber without permission of the other.)

What is the name of the principal base and meridian in the state of Utah?

Salt Lake

If the court granted an action in your favor which of the following actions would best benefit you? (a) Attachment (b) Writ of Execution (c) Les Pendens (d) Judgment

Writ of Execution Explanation: In a Writ of Execution the court forces property to be sold to pay off the amount owed from a Judgment. Les Pendens are a notice to the public of a legal action, attachments are motion granted as security in case the plaintiff does win the judgment.

The home to be insured had a value of $313,500. It was only insured for 85% of its value, and the cost for insurance was .65 per $100 of value for a three- year policy. How much was the premium for one year? a) $577.36 b) $625.00 c) $533.42 d) $638.50

a) $577.36

The survey helps establish all of the following EXCEPT: a) Property Condition b) Easements in relation to all permanent structures c) True property lines d) Placement of structures, consistent with setback requirements and other restrictions

a) Property Condition

People who execute a document are referred to as: (a) Signatories (b) Notary Republics (c) Testators (d) Executors

a) Signatories To execute a document refers to the placing of signatures therefore puts the contract into effect.Executor is the person who carries out the will; "testator" wrote the will; a notary public verifies your signature. A person who signs any document is the signatory.

A purchaser should obtain which one of the following to be sure there are no encroachments: (a) Survey (b) Encroachment protection policy (c) Title insurance (d) Declaration of offset

a) survey Title insurance basically covers things that would be found in the records. An encroachment would not be in the records. The best protection would be a survey, or one of the expanded title policies might cover encroachments.

An assessor is trying to determine the square footage of a property. He measures: a) the outside dimensions. b) the inside rooms including the closets. c) inside, usable area. d) the home, excluding hallways.

a) the outside dimensions

The phrase "the primary evidence of a loan" best describes: (a) The promissory note (b) The trust deed (c) The defeasance clause (d) The mortgage document

a) the promissory note (Mortgage Law) The promissory note is the evidence that a loan exists. The trust deed or mortgage is the security or collateral for that loan.

On the Closing Disclosure for a property closing on March 16th of the year, the proration of property taxes would appear as: a. Debit seller, credit buyer b. Credit seller, debit buyer c. Debit seller, debit buyer d. credit seller, credit buyer

a. Debit seller, credit buyer

The non-disturbance clause found in the loan comes into play when and protects whom? (a) default on loan: lessee (b) loan is paid off: lessee (c) eminent domain: lessor (d) default on lease: owner

a. Default on loan: lessee Explanation: (Leases) This concept is also mentioned in the Finance class as it is contained in the loan document between the owner of the property and the lender. If the loan contains the clause, it will also be mentioned in the lease between the owner and the tenant.

Which statement best describes the purpose of a mortgage document? (a) It places a lien on the property allowing the mortgagee to seize the property if the mortgagor fails to honor all obligations spelled out in the mortgage. (b) It provides legal proof of the various property rights of the borrower. (c) It allows the mortgagor to seize the personal assets of all mortgagees who sign the document. (d) It spells out the interest rate and all other terms of the loan.

a. It places a lien on the property allowing the mortgagee to seize the property if the mortgagor fails to honor all obligations spelled out in the mortgage. (Explanation: [Mortgage Law] The Mortgage contract is detailed and complex. Its primary purpose is to allow the lender to take back the property in the event of the property owners failing to honor all the obligations spelled out in the Mortgage.)

The age of an improvement can be discussed from several viewpoints. Which would be considered to be the longest? (a) Physical life (b) Service life (c) Economic life (d) Effective life

a. Physical life Explanation: It might not be economically viable, yet is still standing: physical life.

Which of the following is true about flood insurance? a. Properties in a flood zone identified by FEMA must carry flood insurance. b. Homeowner's insurance will cover loss from floods. c. Flood insurance can be obtained only if you reside in a flood zone. d. Floods are infrequent enough that flood insurance is optional in all states.

a. Properties in a flood zone identified by FEMA must carry flood insurance.

A deed filed in the public records provides which of the following a. constructive notice b. escheat c. statute of limitations d. actual delivery

a. constructive notice

Which of these situations does NOT cause a contract to become voidable a. contract is not in writing b. menace c. duress d. one of the parties is a minor

a. contract is not in writing

Two people buy a property together if one dies full ownership will automatically belong to the other this is called a. joint tenancy b. tenancy in common c. tenancy at sufferance d. community property

a. joint tenancy

Each of the following statements are true about deed EXCEPT: a. the deed must use a legal description to identify the property b. the deed does not need to be in writing c. grantor must be of legal age and sound mind but not the grantee d. grantor must sign the deed

a. the deed must use a legal description to identify the property

The listing agent advertises his listing on the mls as instructed by the seller and at the agreed list price of $300,000 a buyer offers the seller $300,000 in writing with an earnest money deposit of 3,000 which of the following statements are true? a. the seller can either accept , reject or counter the offer b. the listing broker must wait 72 hours before presenting the offer to give other buyers an opportunity to purchase the property c. because the offer is full price the seller is obligated to accept the offer d. the seller must pay a commission and accept the offer

a. the seller can either accept , reject or counter the offer

The main purpose of title insurance is: a. to compensate the policy holder for any losses incurred from an unidentified defect in the title b. the prove the seller has the right to sell the property c. to compensate the property owner if the seller does not have sufficient funds to clear all liens based on discounted selling price d. to compensate the lender in the event of loss due to default on the loan

a. to compensate the policy holder for any losses incurred from an unidentified defect in the title

A builder buys a lot and obtains a loan to build a "spec house." What type of loan would he have? a) Graduated b) Construction c) Blanket d) Wraparound

b) Construction

M obtained a loan for $80,000 at 9 1/2% interest for thirty years. The payment is $672.68 including principal and interest. How much interest would M pay over the full term of the loan? (Math Question) a) $228,000 b) $162,164.80 c) $308,000 d) $242,266.01

b) $162,164.80

A lender, as security for a loan, has the right to force the sale of the property to recover the amount owed.But if more than the loan and costs amount is recovered, the excess goes back to the borrower. This is: (a) Mortgage theory (b) Lien theory (c) Hypothecation theory (d) Title theory

b) Lien Theory (Mortgage Law) In title theory states the lender owns the property, therefore would be entitled to any profits. In lien theory, the lender is entitled to loan payoff (and costs of foreclosure), but any profits are the defaulting borrowers.

At the beginning of each month the lessee gives, and the lessor takes the rent. This best describes: a) Tenancy by the entirety b) Periodic Tenancy c) Joint Tenancy d) Tenancy at will

b) Periodic Tenancy

At the beginning of each month the lessee gives, and the lessor takes the rent. This best describes: (a) Joint tenancy (b) Periodic tenancy (c) Tenancy at will (d) Tenancy by the entirety

b) Periodic tenancy (Leases) Two of these "tenancies" describe ownership and two describe leasing situations. Joint tenancy and tenancy by the entirety are ownership. Tenancy at will is of uncertain duration and can be cancelled at will by either lessor or lessee.

Zachary received a warranty deed after purchasing a property. He saw that his name had been misspelled. Which of the following documents would he execute to correct the title? a) Special Warranty Deed b) Quit Claim Deed c) Bargain and Sale Deed d) General Warranty Deed

b) Quit Claim Deed

Which of the following are NOT typically paid in arrears? (a) An agent's commission (b) Rent (c) Loan interest (d) 11 months of property taxes

b) Rent Arrears is the opposite of paid in advance. Rent is most always paid in advance and agents are typically paid after their service is rendered. When you think of arrears, think "after the fact."

The relationship between the lessor and the lessee could be defined as which of the following? a) Tenants in common b) Tenancy for years c) Joint Tenancy d) Life Estate

b) Tenancy for years

Z listed the property. When the buyers expressed interest in seeing it, Z disclosed they would have no representation and the buyers agreed in writing. When writing the offer, the buyers asked Z what they should offer. Z responded, "Oh 93% of the listed price would be good." Which most applies? a) This would be a good suggestion for the agent to make. b) This is ostensible agency between Z and the buyers c) Z is properly representing the seller and obtaining an offer. d) This is limited agency and legal.

b) This is ostensible agency between Z and the buyers.

When taking a listing, agent J had sellers who insisted their house was worth more than the one down the street for sale, even though both houses were basically the same. J explained that buyers won't pay any more than they have to in order to get what they desire. This is the principle of: (a) Progression (b) Substitution (c) Contribution (d) Balance

b) substitution The question is a perfect description of the principle of substitution. The other answers are all also principles. If you're not familiar with them, it would be good to go back and review.

In Utah, what is the statutory period for obtaining a prescriptive easement? a. 5 years b. 20 years c. 40 years d. 7 years

b. 20 years

Which of the following statements about annual percentage rate (APR) is FALSE? a. The purpose of the APR is to communicate to the borrower in simple terms the true annual cost of the loan b. The APR cannot change from the initial TIL disclosure more than 1/4% c. The APR represents the effective annual interest rate on the money borrowed after considering the various costs to obtain the loan d. A change in the APR does not affect the monthly payment if the stated interest rate does not change

b. The APR cannot change from the initial TIL disclosure more than 1/4%

HUD oversees each of the following federal laws of programs EXCEPT: a. GNMA b. Truth in Lending c. Real Estate Settlement Procedures Act d. FHA

b. Truth in Lending

Which of the following choices would not be considered to be valuable consideration and therefore meet the requirements for a valid contract a. performing a service b. a lifelong friendship c. a parcel of land with back taxes due d. promissory note

b. a lifelong friendship

What do you call the person who signs a document on behalf of another a. client b. attorney in fact c. customer d. power of attorney

b. attorney in fact

When dealing with a land contract or Uniform Real Estate Contract, which one of the following choices is NOT one of the remedies for default? a. hire an attorney to collect the back amounts owed b. change the locks and hold their belongings as security for back payments owed c. use the steps of foreclosure to get them out d. treat them as renters and evict them

b. change the locks and hold their belongings as security for back payments owed

The sales comparison approach to property valuation: a. has nothing to do with the buyer or seller it is determined statically by the appraiser b. it is based on the concept that a buyer is willing to pay only as much money as he/she would have to pay for another similar property c. is based on how much more a buyer would pay to upgrade from his/her present home d. it is viewed to be the least accurate because it is based on the buyer/seller emotion

b. it is based on the concept that a buyer is willing to pay only as much money as he/she would have to pay for another similar property

A lessee agreed to pay property tax and hazard insurance as well as rent this lease is a. proprietary lease b. net lease c. percentage lease d. gross lease

b. net lease

Which of the following is not a true statement about the settlement statement: a. it is to account for all money involved in the transaction b. the seller's loan payoff will be a debit to the seller, a credit to the buyer c. buyer total closing cost will appear on the back and front of the statement d. it will note if monies were paid up front

b. the seller's loan payoff will be a debit to the seller, a credit to the buyer

A broker can be charged with violating the Sherman antitrust act if he/she says to a seller: a. we never discount the commission b. we cant possibly charge less than the rate established through the multiple listing service c. the commission is fully negotiable between the broker and the seller d. our company usually charges 6% for this type of listing

b. we cant possibly charge less than the rate established through the multiple listing service

What is the amount of pre-paid interest to the borrower if her $205,000 loan at 5.5% annual interest rate closes on November 15? a) $258.33 b) $939.58 c) $469.79 d) $370.00

c) $469.79

K wanted a property that was at least 3/4 of an acre in size. K liked the home on a property 434' by 289'. How many acres is this particular parcel? (a) 3 acres (b) 1.76 acres (c) 2.88 acres (d) 2.33 acres

c) 2.88 acres

When considering income tax issues which of the following relates to the phrase two of the last five years? a. Home office deduction b. 550,000 exemption c. 250,000 exemption d. Interest deduction

c) 250,000 exemption

The purpose of a document receipt is to verify that: a) both the buyer and seller received all appropriate documents at the closing b) The buyer signed all documents involved with the loan c) All parties have received fully signed copies of the Real Estate Purchase Contract d) All involved agents and brokers have signed the purchase agreement

c) All parties have received fully signed copies of the Real Estate Purchase Contract

Which of the following do not have the ability to enter a contract? (a) An Alien (b) An illiterate person (c) An insane person (d) A deceased person

c) An insane person

A lessee had two years to go on a five-year lease. Which would release the tenant from further obligation to pay rent after they voluntarily moved out? a) Actual Eviction b) Habeus Corpus c) Constructive eviction d) Habendum

c) Constructive Eviction

Which essential clause in a deed is a Latin term that translates as "to have and to hold?" (a) Quid pro quo (b) Post granting (c) Habendum (d) Ad Valorem

c) Habendum (Deeds) An Habendum clause commonly contains the phrase, "To have and to hold." An Habendumclause clarifies the type and extent of interest conveyed by the granting clause.

R wanted to buy Q's home, but being new on the job could not qualify. Q agreed that with $15,000 down, Q would carry a loan for the remainder of the purchase price, amortized over 30 years at 8% interest. This is a(n): a) Double contract, and illegal (b) Wraparound loan (c) Purchase money mortgage (d) Discounted loan or note

c) Purchase money mortgage Seller financing = purchase money mortgage. In this case it is not also a wraparound as the new loan does not incorporate an existing loan.

A particular parcel was zoned residential, single family and was surrounded by others zoned the same. That parcel was rezoned commercial so a convenience store could be built. This is an example of: a) Legal non-conforming use b) Defeasible fee estate c) Spot Zoning d) Variance

c) Spot Zoning

All of the following are true about residential appraisals EXCEPT: a) Since a borrower's available cash for closing is generally limited and the lending guidelines are rigid, the loan originator should carefully review the appraisal for any errors. b) A lender will generally limit the loan to a maximum percentage of the appraised value of the property. c) The appraiser's final estimated market value readily allows for an increase in settlement costs up to 10% before the closing. d) A successful closing can be highly dependent on the appraiser's opinion of value.

c) The appraiser's final estimated market value readily allows for an increase in settlement costs up to 10% before the closing.

George smith who owns his property fee simple grants a three year lease to tom green during the second year of the lease George sells the property to Ned Gray what happens to the lease when the sale closes a) property cannot be sold and title transferred to a new owner when a lease is in effect b) it must be negotiated between gray and Mr Green the leasee c)the lease remains in effect with Mr gray and Mr green d) it terminates

c) The lease remains in effect with Mr. Gray and Mr. Green

After an offer to purchase real property has been signed and presented, how long does the offer-or have to withdraw the offer? a) Once the offer has been signed, it cannot be withdrawn until the offeree accepts, rejects, counters or the stated time period for acceptance has elapsed. b) Twenty-four hours following presentation c) Until the offer has been accepted d) Three days following the presentation

c) Until the offer has been accepted

The owner of a commercial property wants to sell the seller wishes to allow many borkerages the opportunity to sell the property the seller should: a. sign an exclusive right to sell listing b. execute an exclusive agency listing with each brokerage c. execute an open listing with the brokerages he wishes to hire d. sign a net listing

c) execute an open listing with the brokerages he wishes to hire

At closing on a loan the APR is higher than the interest rate because a) the interest rate is calculated on a 360 day calendar b) interest rates fluctuate between the application for the loan and the closing date c) the borrower paid some extra costs to obtain the loan d) the lender paid some costs that contributed to the loan

c) the borrower paid some extra costs to obtain the loan

A single family investment property had a GRM of 92.68. The monthly gross rents were $1,800. What is the value of the property based on the GRM? a. $135,850 b. $148,500 c. $166,824 d. $152,320

c. $166,824 (Explanation: GRM = Property Price/ Gross Rental Income. GRM(92.68) = Property Price (X) / Gross Rental Income (1,800). 1,800 * 92.68 = 166,824)

A guarantee in a deed which says the grantor really does own the property and has the right to convey it to another is called the a. covenant against encumbrances b. covenant of warranty forever c. covenant of seizin d. covenant of further assurance

c. covenant of seizing

the renters hadn't paid rent for the past 2 months the landlord was sick of it and ready to act which of the choices is appropriate and legal? a. put their belongings out on the street until rent is collected b. have the locks changed so they can't get back in c. initiate an unlawful detainer action in court d. immediately call the sheriff to put them out

c. initiate an unlawful detainer action in court

What does a mortgagor not have to pay a. title insurance b. property taxes c. life insurance d. hazard insurance

c. life insurance

The owner wants to net $40,000 upon selling the property. The commission is 7%, there will be $2,500 in closing costs, plus a $450 fee to the attorney. What does the property need to sell for to the the owner $40,000 net? a) $215,716 b) $50,125.00 c) $200,555 d) $46,182.80

d) $46,182.80

If the interest rate on a straight loan is 8% and the monthly interest payment is $650, what is the amount of the loan? a) $75,682 b) $103,250 c) $88,750 d) $97,500

d) $97,500

What term best describes a situation where the lessor collects rents from the tenants and pays expenses out of those rents? a) Net Lease b) Participation Lease c) License Estate d) Gross Lease

d) Gross Lease

Which of the following is NOT one of the essential elements of value? (a) Scarcity (b) Demand (c) Transferability (d) Highest and best use

d) Highest and best use DUST

An agent contacted an owner to see if they might want to sell the property. The agent said, "I think I can get you $250,000," which surprised the owner. The owner said, "Ok, and anything over that can be your commission." This is: a) A really good deal for the agent and the agent should jump on it! b) Only legal if the agent ran comps and can justify the $250,000 number. c) A perfectly good way for agents to market themselves and get listings. d) Is a net listing and could be grounds for disciplinary action against the agent.

d) Is a net listing and could be grounds for disciplinary action against the agent.

L agreed to carry a 2nd in the sale of the home. It was for $20,000, 9% interest, 30 years, payment of $160.92 per month. However, it had a five year call when the buyer would pay off the balance of $19,176. How would you describe this loan arrangement? a) Fully amortized b) Discounted c) Wraparound d) Partially amortized

d) Partially Amortized

A house was listed for $180,000. The owners owe $130,000 on a first mortgage. The listing agent receives an offer for $120,000. The agent knows the closing costs will be $4,560 and attorney's fees $5,440. The agent should: a) Tell the buyers they should pay the closing costs. b) Refuse to present the offer to the owner because he knows it is less than the owner owes. c) Present the offer to the sellers and tell them to reject the offer. d) Present the offer to the owner

d) Present the offer to the owner

What is the risk to a lender who accepts a deed in lieu of foreclosure? a) There must be a foreclosure to make the deed valid b) A deed in lieu of foreclosure is considered illegal c) The original borrower may be represented by a lawyer. d) They would accept the deed subject to any junior liens.

d) They would accept the deed subject to any junior liens.

When a lender confirms a specific loan amount and agrees to the interest rate, this process is referred to asa(n): (a) Interest insurance (b) Origination fee (c) Disclosure (d) Lock

d) lock A premium is paid to lock the rate so if it goes up before closing on the deal, the borrower still gets the lower rate. Without a lock, the borrower takes his/her changes.

M's back yard measured 56 feet deep by 82 feet wide. m is going to buy grass to seed the lawn the package indicates how much is needed in square yards. how many square yards are in m's back yard? a 4592 b. 765 c. 170 d. 510

d. 510

Discount points could best be described as: a. money charged to originate the loan b. an additional security deposit given to the bank to secure the loan c. a reward the bank gives for referring a new borrower d. a way to raise the effective yield of the loan

d. a way to raise the effective yield of the loan

The agent presented an offer on the contract in the space for the buyers name was written an undisclosed buyer this would be an example of which type of principal a. illegal b. fully disclosed c. undisclosed d. partially disclosed

Sales General Exam - Stringham Real Estate School

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