The CE SHOP Pricipals of RE 2

187 days (January - June is six months. In a statutory year, there are 30 days in each month (6 × 30 = 180 days). Because the closing is happening on the seventh day, we need to add seven more days (180 + 7 = 187 days).

Assuming that the seller pays for the date of closing, if closing is July 7, how many days will the seller be responsible for paying using a statutory year?

Gross Lease

Brittany has a set monthly lease payment that has been calculated to include maintenance of the restroom, small kitchen, and all nets, utilities, and janitorial charges for her space which also includes taxes and insurance. By the landlord paying these expenses himself, what type of lease does she have?

0

Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What's the maximum number of adjustments Steve should make to the Joneses' property?

Financing terms and cash equivalency. When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

At least 18 years old

To qualify as a Texas veteran, a person must ______.

$237,654.87. Take the sales price of the property divided by the total profit 100% + 13% = 113%. Then divide $268,550 by 1.13.

What did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? Round to the nearest cent.

The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property.

What is the 200% rule as it relates to tax-deferred exchanges?

Total commission ÷ sales price

What is the correct calculation to figure out a commission rate?

Obtain a court action to quiet title.

What must be done to obtain title to property after meeting all of the requirements of adverse possession?

Fully amortized loan payment plan

Which payment plan consists of the borrower paying a constant amount made up of principal and interest on a periodic basis (usually monthly)?

Direct Loans

Which type of FSA loan program is serviced by the FSA, but uses government money?

The buyer

Who is responsible for obtaining evidence of title and title insurance

To provide support to their clients

Why do the seller's and buyer's agents attend the closing?

Many times, the amount of insurance specified in the lease is higher than the amount a tenant actually carries, and higher than the amount the landlord actually requires.

Why is it important for tenants and owner/landlords to review the insurance section of a commercial lease?

Taxes, insurance, and maintenance

With a triple net lease, the tenant pays _______ separately from the base rent.

Ground Lease

With this type of commercial lease, any improvement made to the property by the tenant belongs to the landowner when the lease expires.

Deed

A document that establishes proof of ownership of property and transfer of title.

External Depreciation

A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?

Toxic Loan Features

A qualified mortgage may not include interest-only payments and balloon payments, or lender fees and points that total more than 3% of the loan because these are considered ______ in relation to the qualified mortgage.

$276,596. To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.

A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?

7.9%. The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R). So $67,500 ÷ $850,000 = .079 or 7.9%. This formula can work in reverse as well: value (purchase price) × cap rate = net operating income (V × R = I).

A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall?

Destroy the files

According to Texas's Identity Theft Enforcement and Protection Act, what should property managers and landlords do with old tenant records that contain sensitive personal information?

Document that shows the balance due on the loan

An estoppel certificate is a _________.

Gross rent multiplier

An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?

Freddie Mac (FHLMC)

Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution?

Must have a minimum of a sales agent license to collect rent and perform other functions

Anyone working for a property management company in TX and works for more than one owner...

Highest and best use

Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?

Buyer

At closing, who pays for and receives clear title for the property being purchased?

moratorium

Builders weren't allowed to develop new properties in Cityville for six months. This is likely because the city had enacted a ______.

Cost approach

Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built homes is the ______.

Up to the full amount of the purchase price

Cindy has gotten title insurance for the home she just purchased. She was able to put a small down payment on the home. What amount will the title insurance reimburse?

Rent

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?

Restrictive Covenants

Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______.

15%

ENERGY STAR®-qualified homes are rated ______ more energy efficient when compared to homes built before 2004.

Endorsements

Glenda's lender is requesting __________________ to the standard coverage on her title insurance policy to cover any additional risks that may appear down the road.

Loft

His employees all work at tables in an open office space. Dean most likely has a _______ lease for the office space.

Functional obsolescence

Homes in a new home development have been built with a floor plan that doesn't appeal to today's buyers. In a cost approach valuation of the houses, what sort of depreciation will the appraiser apply?

Once every 2 years

How often can the capital gains exclusion be claimed?

The sellers existing mortgage

In a typical transaction, which of these title defects is unlikely to cause a problem for the buyer?

The market for similar homes is good.

In completing a CMA, finding a comparable (competitive) property that had a quick sale may indicate which of the following?

To clear up a Cloud on title

Jeff has filed a quiet title suit against Roger. What's the purpose of this suit?

Inverse Condemnation

Occurs when a property's value is negatively effected by gov regulation but the owner is not offered just compensation.

43%

Qualified mortgages require debt-to-income ratios of no more than ______.

Curable and incurable

Related to depreciation, what are the two types of physical deterioration?

Loan Flipping

Talking the consumer into refinancing over and over so a lender can charge fees is ______.

3

The Loan Estimate must be provided to the consumer within ______ days after they apply for a loan.

Loan Estimate

The ______ is used by the borrower when shopping for a loan

Credit to the buyer

The amount covered by the new loan is a ______.

Laches

The doctrine of "use it or lose it" is known as the doctrine of ______.

Police power

The government's authority at all levels to ensure the health, safety and welfare of its citizens, which includes the control of public land use is the definition of ______.

$1250

The property is a 475-foot by 150-foot rectangle. What's the linear footage?

Monthly expense ÷ 31 days × 10 days

The water and sewer for a property closing on January 10 is billed in arrears. Assuming the sellers own the property the day of closing, which formula(s) can be used to calculate their prorated debit using the calendar year method?

Mortgage loan value, annual percentage rate, loan term, and payment frequency

To compute a monthly principal and interest payment, which of the following pieces of information do you need to know?

Conditions of the sale

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority?

Variable Expenses

Unforseen expenses such as replacing a roof due to the damage from a hail storm.

DUST. demand, utility, scarcity, and transferability.

What acronym can be used to remember factors that influence real property value?

Items to be divided proportionately between the buyer and seller that the seller hasn't fully used

What are prepaid expense items?

Mortgage and Equity

What are the two types of real estate investment trusts?

An automated system accessed by an intermediary that allows for electronic comparison of mortgages.

What is a closed CLO?

Triple Net Lease

You have a client who's leasing commercial space. The lease terms call for him to pay a portion of the landlord's taxes, insurance, and maintenance. What type of lease does your client have?

They have a high compliance rate

Which one of the following characteristics makes property taxes a reliable target for taxation?

An energy-improvement mortgage

Cecie and Gerald are very green and environmentally conscious, and look forward to making several energy-efficient improvement to their new home. Their real estate sales agent knows his stuff and recommends they look into which type of mortgage?

$4700 (A point is 1% of the loan amount. Dale and Barbara's loan is $235,000, and they're paying two points (2%) at closing, which comes to $4,700 ($235,000 × 0.02).)

Dale and Barbara, your buyer clients, aren't thrilled about the current interest rates on home loans. They opt to pay two discount points to their lender to bring down their monthly payment. They're financing $235,000 on their new $400,000 home, so how much can they expect to pay for points at closing?

The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point.

How does the "break-even point" relate to percentage leases?

20

How many days does the Texas seller have to deliver a "commitment for title insurance" to the buyer under the terms of the TREC One To Four Family Residential Contract (Resale)?

Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit

If a tenant moves out before a lease term expires and the landlord is able to rent the unit, the tenant is ______.

The Court

In Texas, whose responsibility is it to determine the validity of a will as part of the probate process?

Only the original tenant

In a sublease situation in Texas, who has the right to evict the sublessee?

Her bank sold it on the secondary market as an investment product.

Joann purchased her house with a mortgage loan from her friendly neighborhood bank. Which of these most likely happened to Joann's loan soon after she received it from her bank?

Buisness Risk

Joaquim analyzed a potential opportunity and determined that if he invested $250,000 in the commercial property, he'd likely see a return of 12% on this investment. After several years, Joaquim is seeing a measly 2% return. What type of risk did he fall victim to?

180

John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property?

Periodic Estate

Which of the following types of tenancy comes with an automatic renewal clause?

The purchase price

Which of the following would be considered a seller credit on the closing statement?

23%. Add the costs of the lot and the house together to get the total cost ($163,000). Next, subtract the sales price from the total cost to get the amount of profit ($37,599). Finally, divide the total cost by the profit amount ($37,599 ÷ $163,000).

What percentage of profit would the seller make if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $200,599? Round your answer to the nearest percent.

Referee's Deed

What type of deed are you likely to receive if you purchase a property with cash at a foreclosure auction?

A gain on a property owned more than one year

What type of gain is considered long term?

Real Estate Syndicate

What type of real estate investment may meet the definition of being a security and must adhere to the rules and regulations of the Securities and Exchange Commission?

A legal document that allows a person to act as attorney-in-fact for another in a financial, business, or health matter

What's a power of attorney?

Market Value

What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?

Debit

What's the term for a charge that either party has to pay at closing?

Highest and Best use

When appraisers look past how a property is being used to determine a more optimal function, what are they determining?

You must deliver the deed to the buyer, the buyer's attorney or agent, or the title company of issuance.

When in the final stages of deed transfer, what must you do to satisfy delivery and acceptance of the deed?

$6.67. To calculate the daily rate: $2,400 ÷ 360 days = $6.67

When prorating annual property taxes of $2,400 using the statutory calendar, what's the daily rate, rounded to the nearest cent?

Covenants

When referring to private land use restrictions, fence height, additional structures, and architectural design are generally categorized under ______.

Appraisal Standards Board

Which board determines the national rules for creating an appraisal and reporting its results?

Appraiser Trainee

Which classification of appraiser is the first step to obtaining a license or certification?

Bargain and Sale Deed

Which deed type may come with or without covenants of warranty?

Contribution

Which economic principle pertains to how a change in a property affects its value as a whole?

The Civil Court System

Which entity enforces subdivision covenants?

Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.

Which of the following best describes a marketable title?

Geographic area developed in a community and identified by number

Which of the following describes a census tract?

Always equipped with elevators

Which of the following describes a high-rise building?

Qualified mortgage with a safe harbor status

Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements?

10.56789

Which of the following numbers represents a calculator with the appropriate decimal place set up to eliminate most rounding errors?

A refinance of a property valued at $375,000

Which of the following properties is exempt from the FIRREA federal appraisal guidelines?

Neither the landlord nor the tenant is required to make improvements to a leased property.

Which of the following statements about improvements and lease agreements in Texas is true?

$8,343. The total commission from the sale was $27,810 ($463,500 × 0.06). Split with the buyer's broker, Yasmin's firm's share is $13,905 ($27,810 ÷ 2). Yasmin's 60% share of the firm's commission works out to $8,343 ($13,905 × 0.60).

Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction?

7%. You can find the interest rate by dividing total interest paid by the loan balance. So, $6,300, which we get by taking $525 per month times 12 months per year, is divided by $90,000.

You're working with buyers who are pre-approved for a loan up to $90,000. If they estimate paying $525 per month toward interest, what interest rate are they assuming?

$2400 ($160,000 x .75 = $120,000 (the loan amount after their 25% down payment). Take $120,000 ÷ 100 (1 point) = $1,200. 2 points then would be $1,200 x 2 = $2,400.)

Your clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?

$420,605. 100% - 5% = 95% (.95), and $395,000 + $4,575 (before commission) = $399,575. $399,575 ÷ .95 = $420,605 (rounded).

Your clients received a check for $395,000 when they sold their property, which they owned free and clear. Their closing expenses were $4,575, and they paid 5% in brokerage fees. What was the sales price of their property? Round to nearest whole dollar.