Broker’s Exam Flashcards
If the interest rate on an FHA-insured mortgage loan is 5.5% and the monthly payment is $1,012, the principal sum would be
$220,800
To find the principal sum, multiply the monthly payment by 12 (12 months in a year) and divide that amount by the interest rate.
$1,012 × 12 = $12,144 (annual payments)
$12,144 ÷ 5.5% (0.055) (interest rate) = $220,800 (the principal amount)
A married couple owns a farm together, with the right of survivorship. Their ownership is MOST likely
a tenancy by the entirety.
A married couple, in certain states, may use a special form of co-ownership called tenancy by the entirety. Each spouse has an equal, undivided interest in the property, with the right of survivorship.
The effective gross annual income from a property is $112,000. Total expenses for this year are $53,700. What capitalization rate was used to obtain a valuation of $542,325?
10.75%
The capitalization rate may be found by dividing the net operating income (NOI) by the value of the property (rate = NOI ÷ value). In this case, the annual NOI is found by subtracting the yearly expenses from the gross annual income: $112,000 (annual income) ‒ $53,700 (total expenses) = $58,310 (the NOI). $58,301 (ROI) ÷ $542,325 (the value) = 10.75% (0.1075)
The electrical wiring in a house is defective. The broker who listed the house is aware of this and intentionally deceives a potential buyer about it. The buyer purchases the home and later suffers a financial loss due to the faulty wiring. This is an example of
fraud.
Fraud is lying or covering up a known fact
When the tenant breaches the lease, it gives the landlord the right to proceed with
actual eviction by filing a suit for possession
If the tenant breaches the lease, the landlord would start eviction procedures known as actual or judicial eviction. Specific performance would be part of a purchase contract as a remedy for default of the seller or buyer. Constructive eviction occurs when the landlord is in default and allows the tenant to break the lease and move.
Potentially responsible parties (PRPs) are least likely to include
real estate licensees
Real estate licensees are not identified as PRPs. This term refers to potentially responsible parties, such as present and past owners of a property who are responsible for releasing hazardous material into the environment.
This month’s interest payment is $585.70. If the buyer secured a 90% loan at an 8.75% annual rate of interest, what was the sale price?
$89,250
$585.75 × 12 = $7,028.40 annual interest
$7,028.40 ÷ 8.75% (0.0875) = $80,324.57 loan amount
$80,324.57 ÷ 90% (0.90) = $89,249.52, round to $89,250
Which of these is TRUE about a holdover tenant?
The landlord may evict the tenant.
A tenant who remains in possession of the premises after an estate for years has expired is called a holdover tenant. If the landlord accepts a rental payment from the holdover tenant, acceptance of the payment will usually create a periodic tenancy. However, a landlord can evict the holdover tenant and not accept any additional payments.
A landowner constructed a building seven stories high. Several years later, the municipality changed the zoning ordinance, prohibiting buildings that exceed six stories in height. Which of these is TRUE regarding the existing seven-story building?
It is a nonconforming use.
A building that existed before the current zoning ordinance may be allowed to continue legally with some restrictions. The owner does not need to obtain a variance or a special use permit for the building. A conditional or special use permit allows a property to be used for a common good not currently allowed in zoning ordinances. A variance is permission to use a property in a way expressly prohibited by zoning ordinances.
If the gross rent multiplier of a property is 112 and the rent is $600 monthly, what is the value of the property?
$67,200
112 × $600 = $67,200
All of these are essential elements of a contract EXCEPT
words of conveyance
The essential elements of a valid contract are the following: competent parties, mutual agreement, lawful objective, consideration, and in writing. Words of conveyance are required in deeds.
It is necessary to calculate a dollar value for depreciation when using which of these?
The sales comparison approach to value
One of the components of the cost approach is the calculation of depreciation caused by wear and tear, functionality of items, or outside influences. The calculation is not used in the sales comparison or income approaches to value. A gross rent multiplier is used in the income approach to value for one-to-four residential rental properties.
An owner wants to receive a net of $82,000 after selling her home. She has an existing mortgage of $32,500 and will have selling expenses of $444. If the broker is to receive a 7% commission, what is the lowest offer that she can accept for the property?
A)
$122,990.08
B)
$123,959.70
C)
$122,515.08
D)
$123,595.70
$123,595.70
$82,000 + $32,500 + $444 = $114,944
$114,944 ÷ 93% (0.93) = $123,595.70
