Ch 57 -

Question 1

An ____ is an unbiased estimate of the nature, quality, value or utility of an interest in or aspect of identified real estate and related personalty as of a certain date.

Answer 1

Appraisal

An appraisal is an unbiased estimate of the nature, quality, value or utility of an interest in or aspect of identified real estate and related personalty as of a certain date.

Question 2

T/F: A comparative market analysis is not an appraisal.

Answer 2

True

A comparative market analysis is not an appraisal. CMAs are done by real estate licensees.

Question 3

T/F: A comparative market analysis (CMA) is done by real estate licensees.

Answer 3

True

CMAs are done by real estate licensees.

A comparative market analysis is not an appraisal.

Question 4

______ value is the amount of the return on an investment that an income-producing property will produce.

Answer 4

Investment value

Investment value is the amount of the return on an investment that an income-producing property will produce.

Question 5

_____ value of a property is the value the property holds for the owner. Several factors contribute to this value.

Answer 5

Use Value

Use value of a property is the value the property holds for the owner.

Examples:
Income 
Appreciation 
Use 
Tax benefits

Question 6

_____ value is the value the lender places on a property as collateral for the loan, especially in the event of a foreclosure.

Answer 6

Mortgage Value

Mortgage value is the value the lender places on a property as collateral for the loan, especially in the event of a foreclosure.

Question 7

_______ may be defined as the highest price a buyer would pay and the lowest price a seller would accept for a property at a given time and given certain conditions in a particular marketplace.

Answer 7

Market value

Market value may be defined as the highest price a buyer would pay and the lowest price a seller would accept for a property at a given time and given certain conditions in a particular marketplace.

Question 8

Are labor and materials direct or indirect costs?

Answer 8

Direct Costs

Direct costs are also called hard costs. This includes the cost of labor and materials.

Question 9

T/F: A pending sale means the offer is accepted but the transaction not yet closed

Answer 9

True

Offer accepted but transaction not yet closed; may be pending for 30-60 days.

Question 10

The ________ approach is deemed to be the most reliable for appraisals of single-family homes.

Answer 10

Sales comparison

The sales comparison approach is deemed to be the most reliable for appraisals of single-family homes.

Question 11

The ______ approach is most reliable for properties that were built recently.

Answer 11

Cost approach

The cost approach is most reliable for properties that were built recently.

The cost approach attempts to estimate either the property’s replacement cost or reproduction cost.

Question 12

T/F: If a comparable lacks a feature that the seller’s property has the licensee will add the value of the feature to the price of the comparable.

Answer 12

True

If a comparable lacks a feature that the seller’s property has the licensee will add the value of the feature to the price of the comparable.

Question 13

T/F: The licensee should give the seller a listing range and then the seller can set the price to whatever he or she feels comfortable with within that range.

Answer 13

True

The licensee should give the seller a listing range and then the seller can set the price to whatever he or she feels comfortable with within that range.

Question 14

The use of a ____ form could go a long way in correcting any misconceptions the sellers might have about market values in their neighborhood.

Answer 14

CMA Form

The use of a CMA form could go a long way in correcting any misconceptions the sellers might have about market values in their neighborhood.

Question 15

A _______ is a binding contract that establishes the manager’s legal authority over the operation of a given property.

Answer 15

Management agreement

A management agreement is a binding contract that establishes the manager’s legal authority over the operation of a given property.

Question 16

It is best not to form a management agreement that will be valid for less than _____

Answer 16

1 full year

Best not to form for less than 1 yr

A management agreement is a binding contract that establishes the manager’s legal authority over the operation of a given property.

Question 17

T/F: Property management contracts will include:

The authority to pay operational expenses, mortgage payments, taxes, insurance, and other costs;

Answer 17

True

Property management contracts will include:

The authority to pay operational expenses, mortgage payments, taxes, insurance, and other costs;
The power to provide all management services;
The requirement to submit monthly statements;

Question 18

n an Illinois property management relationship, there must be a written property management agreement between:
The property manager and the tenant.
The property owner and the tenant.
The property owner and his partners.
The property owner and the broker.

Answer 18

The property owner and the broker.

The written agreements are between the owner and employing broker.

Question 19

According to the Illinois Human Rights Act, “elderly” is defined as anyone over:

35 years old
40 years old
55 years old
62 years old

Answer 19

40 years old

Elderly is the definition of anyone 40 years of age.

Question 20

The Federal Fair Housing Act prohibits discrimination for all of the following reasons except:

Race or color
Sexual orientation
Familial status
Handicap

Answer 20

Sexual orientation

Sexual orientation

Question 21

All security deposits held by a broker must be maintained, intact, in an escrow account other than the property management accounts:

Without exception.
Unless the owners have agreed otherwise in writing.
Unless the broker has decided otherwise with good cause.
Unless it’s in the city of Chicago, where the regulations do not require this type of escrow account.

Answer 21

Unless the owners have agreed otherwise in writing.

This is true unless the key parties have mutually agreed to other options in writing.

Question 22

A broker must establish and maintain a separate account for the deposit of current rents and money received from the owner or on the owner’s behalf for payment of expenses related to property management. This account is called the:

Earnest money account
Residential easing agent account
Broker’s escrow account
Property management escrow account

Answer 22

Property management escrow account

The account is called a property management escrow account.

Question 23

The escrow account maintained by the property manager must be in a non-interest-bearing account
without exception.
unless the property is residential with 15 or more units.
unless the property is residential with 25 or more units or local ordinance requires payment of interest.
unless the property is industrial.

Answer 23

unless the property is residential with 25 or more units or

This is true unless the property has 25 or more units or local laws require interest payments.

Question 24

The main difference between joint tenancy and tenancy in common is that joint tenancy:
Glossary Terms

A » is inheritable to the heirs
B » has a right of transfer
C » carries the right of survivorship
D » has a unity of possession

Joint tenancy does carry the right of survivorship which means if an owner dies, the surviving owners receive that person`s share. (A) Tenancy in common is inheritable to the heirs, not joint tenancy. (B) Both joint tenancy and tenancy in common allow for a right of transfer. (D) While joint tenancy does have a unity of possession, this is not the main difference.

Answer 24

C » carries the right of survivorship

Joint tenancy does carry the right of survivorship which means if an owner dies, the surviving owners receive that person`s share. (A) Tenancy in common is inheritable to the heirs, not joint tenancy. (B) Both joint tenancy and tenancy in common allow for a right of transfer. (D) While joint tenancy does have a unity of possession, this is not the main difference.

Question 25

CERCLA would normally apply to which of the following situations?

A » A residential property with a buried oil tank
B » A buyer who was discriminated against based on race in obtaining a loan from a lender
C » A person was discriminated against in buying property based on national origin
D » A lender was loaning money to a borrower with an excessive high interest

Answer 25

A » A residential property with a buried oil tank

CERCLA (Comprehensive Environmental Response, Compensation and Liability Act) deals with prohibiting of dumping hazardous waste on property, such as a buried oil tank. (B) The Equal Credit Opportunity Act (ECOA) deals with credit discrimination. (C) Fair Housing laws deal with discrimination in buying a property. (D) Usury laws deal with making loans at excessively high rates.

Question 26

Every timeshare purchaser must be given a public offering statement in Illinois. Upon receiving the statement, or upon signing a contract, whichever is later, the purchaser has how many days to cancel the contract?

A » two days
B » three days
C » three business days
D » five business days

Answer 26

5 business days

Purchasers have five business days to cancel and must get their money back within 20 days.

Question 27

Time share ownership would be most evidenced by:

A » joint tenancy
B » tenancy in common
C » tenancy in the entireties
D » cooperative ownership

Answer 27

B » tenancy in common

A time share involves different owners owning a unit in a condominium as tenants in common (which is inheritable to the heirs). Each owner owns a different period of time, often referred to as interval ownership. (A) Joint tenancy carries the right of survivorship stating if one owner dies, the ownership transfers to the surviving owners. (C) Tenancy in the entireties signifies ownership by married couples only. (D) Cooperative ownership is where people own stock in a corporation, thus granting a leasehold estate.

Question 28

Can either party enforce a void contact?

Answer 28

No

If a contract is void neither party can enforce

Question 29

Providing a copy of the restrictive covenants to the buyer is important for all the following reasons EXCEPT:

It is a good risk management tool.
The buyer may need to have an in-home business that is not permitted.
The buyer may want to add an improvement that is not permitted.

Answer 29

It is a legal requirement.

Not legal requirement to provide restrictive covenants to buyer

Providing a copy of the restrictive covenants to the buyer is not a legal requirement.

Question 30

How should sellers be counseled regarding low offers?

Answer 30

Sellers should be encouraged to counter low offers so that negotiations don’t end abruptly and the seller does not get defensive.