Math 01 Flashcards
1
Q
Jackie obtains a 60% LTV loan on her new $250,000 home with an annual interest rate of 5.5%. What is the first month’s interest payment?
A
$250,000 x 0.60 = $150,000 loan, $150,000 x 0.055 = $8,250, $8,250 ÷ 12 = $688
2
Q
Laura obtains a new loan @ 67% of her home’s price of $300,000. The loan constant is 6.321. What is Laura’s monthly payment?
A
$300,000 ÷ 1000 = $300, $300 x 6.321 = $1,896, $1,896 x 0.67 = $1,270
Price / 1000 = A
A X Constant = B
B X Rate = Monthly Payment
3
Q
Jerry recently obtained an 75% loan on his $410,000 home, and he had to pay $5,600 for points. How many points did he pay?
A
$410,000 x 0.75 = $307,500, $5,600 ÷ $307,500 = 0.018 = 1.8 points
4
Q
A borrower obtained a 70% loan for $600,000. What was the price of the home (to the nearest thousand)?
A
Loan / Rate = Price
$600,000 / 0.70 = $857,142.86
5
Q
The loan officer at 2nd National Bank tells Lana she can afford a monthly payment of $1,900 on her new home loan. Assuming this is an interest-only loan, and the principal balance is $410,000, what interest rate is Lana getting?
A
$1,900 x 12 = $22,800, $22,800 ÷ $410,000 = 0.0556
6
Q
A home buyer pays $1,800 / month for the interest-only loan on his new house. The loan’s interest rate is 6%. If he obtained a 80% loan, what was the purchase price?
A
$1,800 x 12 = $21,600, $21,600 ÷ 0.06 = $360,000, $360,000 ÷ 0.80 = $450,000
7
Q
If you owe $14,000 on a new loan and pay $880 of interest for the year, your interest rate is?
A
.063 = 6.3%
8
Q
A loan applicant has an annual gross income of $76,000. How much will a lender allow the applicant to pay for monthly housing expense to qualify for a loan if the lender uses an income ratio of 30%?
A
1900
(Gross Income / 12) x Income Ratio = Monthly Housing Expense
Formula: AGI / 12 = MGI
MGI X Income Ratio = Monthly Housing Expense
9
Q
A loan applicant has an annual gross income of $42,000. How much will a lender allow the applicant to pay for monthly housing expense to qualify for a loan if the lender uses an income ratio of 32%?
A
1120
Formula: Monthly Principal and Interest (PI) payment = Income ratio X Monthly gross income
10
Q
The Browns obtain a fixed-rate amortized 30-year loan for $310,000 @ 6% interest. If the monthly payments are $1,815, how much interest do the Browns pay in the first month of the loan?
A
1550
(Loan x Rate) / 12
Formula: Step 1: Principal X Interest Rate = Annual Interest
Step 2: Annual Interest / 12 months = 1 month’s Interest
11
Q
A lender determines that a homebuyer can afford to borrow $160,000 on a mortgage loan. The lender requires an 80% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount?
A
200,000
12
Q
A home buyer pays $1,800 / month for the interest-only loan on his new house. The loan’s interest rate is 6%. If he obtained a 80% loan, what was the purchase price?
A
Annual Interest / Rate = Loan Amount
Loan Amount / LTV = Price
450000
13
Q
A lender uses a 39% debt ratio. A borrower earns $40,000 / year and has monthly non-housing debt payments of $700. What housing payment can she afford?
A
Monthly Principal and Interest (PI) payment = Income ratio X Monthly gross income
$1300
14
Q
Christy has monthly loan payments of $1,200. Her loan is for $210,000 @ 6.1% interest. How much of her first payment goes towards principal?
A
Annual Interest / 12 - Monthly Payment
$132.50
15
Q
The loan officer at 2nd National Bank tells Lana she can afford a monthly payment of $1,900 on her new home loan. Assuming this is an interest-only loan, and the principal balance is $410,000, what interest rate is Lana getting?
A
Monthly Payment X 12 = Annual Interest
Annual Interest / Principal Balance = Interest Rate
.0556
16
Q
A borrower has a $770,000 interest-only loan @ 5.5% interest. What are the monthly interest payments?
A
Loan Amount X Rate = Annual Interest
Annual Interest / 12 = Monthly Interest Payment
$3529
17
Q
A property sells for $180,000 one year after it was purchased. If the annual appreciation rate is 10%, how much did the original buyer pay for it?
A
The selling price is 110% of the purchase price. Therefore, the purchase price is the selling price divided by 1.1 (110%). $180,000 / 1.1 = $163,636.
18
Q
A homeowner paid $185,000 for a house three years ago. The house sells today for $239,000. By what percent has the property appreciated?
A
Appreciation as a per cent can be estimated by (1) subtracting the estimated current market value from the price originally paid (239,000 - 185,000 = 54,000) and (2) dividing the result by the original price (54,000 / 185,000 = 29) or 29%.
19
Q
An office building has $300,000 net income and sold for $4,800,000. What was the rate of return?
A
Rate = ($300,000 NOI ÷ $4,800,000 price) = 6.25%
20
Q
An office building has $400,000 net income and a cap rate of 8.25%. What is its value?
A
Value = ($400,000 ÷ 8.25%) = $4,848,485
21
Q
A home that was purchased for $150,000 with a $100,000 loan is now worth $300,000. The current loan balance is $80,000. What is the homeowner’s equity?
A
Equity = $300,000 value - $80,000 debt = $220,000
22
Q
Yvonne bought a home in Biltmore Estates 3 years ago for $250,000. She obtained an 80% loan. Over the past three years, the total appreciation rate has been 18%, and she has paid down her loan by $4,000. What is Yvonne’s equity after this period?
A
Equity = Market value – loan balance. Her loan was .8 x $250,000, or $200,000. Her initial equity was 20% x $250,000, or $50,000. The home has appreciated 18%, or (.18 x $250,000), or 45,000. Plus she has paid down her loan $4,000. Her equity is therefore ($295,000 market value – 196,000 loan), or $99,000.
23
Q
Using the terms Potential Gross Income, Vacancy, Other Income, Operating Expenses, and Gross Operating Income, express the equation for Net Operating Income.
A
(Potential Gross Income - Vacancy) + Other Income = Gross Operating Income
Gross Operating Income - Operating Expenses = Net Operating Income (NOI)
24
Q
Describe the difference between NOI and cash flow.
A
Cash flow is net operating income minus debt service. If there is no loan the two are the same.
25
An apartment building was purchased for $500,000, with the land value estimated to be $100,000. The owner added a $100,000 parking lot. The property was depreciated on a 40-year schedule (for present purposes!). Three years later the property sold for $700,000, and selling costs were $50,000. What was the capital gain?
Tip: work example backwards from last formula to first formula.
depreciable basis = $500,000 purchase price + 100,000 parking lot - 100,000 land = $500,000
total depreciation = ($500,000 ÷ 40 years) x 3 years = $37,500
adjusted basis = $500,000 purchase price + 100,000 parking lot - 37,500 total depreciation = $562,500
amount realized = $700,000 sale price - 50,000 selling costs = $650,000
capital gain = $650,000 amount realized - 562,500 adjusted basis = $87,500
26
An office building has NOI of $200,000, an annual reserve expense of $20,000, interest expense of $130,000 and annual depreciation of $50,000. Assuming a 28% tax bracket, what is its income tax liability?
Tax liability = ($200,000 + $20,000 - $130,000 - $50,000) x 28% = $11,200
27
An investor sold a property for $3 million and incurred $300,000 in selling costs. He originally paid $2.4 million 3 years ago and has depreciation expense totaling $150,000. What was his capital gain?
Capital gain = Take the purchase price ($2.4 million) - depreciation ($150,000) which equals the adjusted basis ($2.25 million). Amount realized = selling price ($3 million) - selling cost ($300,000) which equals $2.7 million. Finally, you take the amount realized ($2.7 million) - adjusted basis ($2.25 million) which equals capital gain ($450,000).
28
Mary Bright bought a home for $120,000, paying $24,000 down and taking a mortgage loan of $96,000. The following year she had a new roof put on, at a cost of $5,000. What is Mary's adjusted basis in the house if she now sells the house for $150,000?
The basic formula for adjusted basis is: Beginning Basis + Capital Improvements - Exclusions and Credits = Adjusted Basis. Mary's adjusted basis is therefore $120,000 + $5,000 = $125,000. The financing terms and subsequent selling price are not relevant.
29
An investor pays $300,000 for a property, $50,000 of which is land, puts $50,000 capital improvements into it, and borrows $250,000 to finance the property. What is the property’s depreciable basis?
$300,000 cost minus $50,000 land plus $50,000 capital improvements, or $300,000. The loan is irrelevant.
30
A principal residence is bought for $180,000. A new porch is added, costing $7,000. Five years later the home sells for $220,000, and the closing costs $18,000. What is the homeowner's capital gain?
Gain = amount realized ($220,000 - $18,000) - adjusted basis ($180,000 + $7,000) = $15,000.
31
An income property has a net income of $20,000, interest expense of $12,000, cost recovery (depreciation) of $3,000, and a tax rate of 28%. What is its income tax liability?
```
Net Operating Income (NOI) $20,000
- interest expense $12,000
- cost recovery expense $3,000
= taxable income $5,000
x tax rate (28%)
= tax liability $1,400
```
32
An investment property generates a cash flow of $50,000 and appraises for $700,000. What is the owner’s return on investment?
ROI = $50,000 ÷ 700,000 = 7.14%
33
An investment property generates a cash flow of $200,000. The owner has $450,000 equity in the property. What is the owner’s return on equity?
ROE= $200,000 ÷ 450,000 = 44%
34
A property's return on equity ratio is 28% and generates a cash flow of $70,000. How much equity does the owner have (to the nearest hundred)?
250,000
35
An office building has NOI of $110,000, interest expense of $47,000 and annual depreciation of $16,000. Assuming a 28% tax bracket, what is its income tax liability?
13,160
36
A home that was purchased for $440,000 with a $320,000 loan is now worth $530,000. The current loan balance is $280,000. What is the homeowner’s equity?
250,000
37
An apartment complex generates $335,000 in effective rental income and $2,500 in other income. The same complex has $144,000 in operating expenses and $116,000 in debt service payments. What is the pre-tax cash flow of the complex?
77,500
38
An office building sells for $979,000 at a cap rate of 8.3%. What is its NOI?
81,257
39
A property has a net income of $40,000, interest payments of $17,000, and annual cost recovery of $9,000. The property's tax rate is 25%. What is the property's annual tax liability?
3500
40
Marcos Pizza has a percentage lease on its 1,500 SF space in the Ashwood Center. The terms are $1.25 / SF / month rent plus 2% of the store’s gross income. If monthly sales averaged $35,000 last year, how much annual rent did Marcos Pizza pay last year?
Their fixed rent is (1,500 SF x $1.25/SF) x 12 months, or $22,500. The percentage rent is ($35,000 x .02) x 12, or $8,400. Total rent is ($22,500 + $8,400), or $30,900.
41
A tax rate on a house with a $300,000 taxable value is 11 mills per thousand dollars of assessed valuation. What is the tax?
Tax = ($300,000 ÷ 1,000) x 11 mills = $3,300
42
The village of Parrish has an annual budget requirement of $20,000,000 to be funded by property taxes. Assessed valuations are $400,000,000, and exemptions total $25,000,000. What must the tax rate be to finance the budget?
The rate = budget / tax base. Thus, $20,000,000 / ( $400,000,000 – $25,000,000) = 5.33%
43
A $300,000 property sells at a 7% commission with a 50-50 co-brokerage split and a 60% agent split with her broker. What are total, co-brokerage, agent’s, and broker’s commissions?
Total commission = $300,000 x .07 = $21,000
Co-brokerage splits = $300,000 x .07 x .50 = $10,500
Agent split = $10,500 x .60 = $6,300
Agent’s broker’s split = $10,500 - 6,300 = $4,200
44
A home seller wants to net $50,000. The commission is 7%, the loan payoff is $150,000, and closing costs are $4,000. What must the minimum contract price be?
Add up the desired seller’s net, the loan payoff and the closing cost: $50,000 + 150,000 + $4,000 = $204,000 seller’s gross profit
Since the seller has agreed to a 7% sales commission, that means he will get to keep 93%, which is 0.93 as a decimal.
Divide seller’s gross profit by seller’s %: $204,000 ÷ .93 = $219,354.83
So, the very minimum amount that the seller can list his house at and still cover his expenses and make his desired profit is $219,354.83.
45
A homeseller wants to net $75,000. The commission is 9%, the loan payoff is $450,000, and closing costs are $36,000. What must the price be (to the nearest $100)?
Desired Net + Closing / (1 - Commission) = Sale Price
$75,000 + $450,000 + $36,000 = $561,000
$561,000 / (1 - .09) = 616,483.51
46
A town has a tax base of $88,000,000 and a total assessed valuation of $99,000,000. What is the total amount of the town's tax exemptions?
11,000,000
47
Rusty sells his home for $330,000. He must pay a 6% brokerage fee which will be split evenly between the selling broker and listing broker. He will also incur $5,000 in other closing costs and pay off a $225,000 mortgage balance. How much can Rusty expect to receive at closing?
80,200
48
A homeowner receives a tax bill that includes an amount for the library district, taxed at $2.00 per $1,000, and the fire protection district, taxed at $3.00 per $1,000. How much does the taxpayer have to pay for these two items if the property's taxable value is $78,000?
390
49
A property listed for $150,000 receives an offer for $120,000. The offer’s percentage of listing price is:
$120,000 ÷ $150,000 = 80%
50
A seller requires a 2% deposit on a property listed for $320,000. The required deposit (assuming a full price offer) is:
$320,000 x 2% = $6,400
51
An annual tax bill is $1,800. Closing is on April 10. What is the seller’s share of the taxes which are paid in arrears?
Monthly amount = ($1,800 ÷ 12) = $150; no. of months = 3
Daily amount = ($150 ÷ 30) = $5.00; no. of days = 10
Proration = ($150 x 3) + ($5 x 10) = ($450 + $50) = $500 seller’s share
52
365-day Method
An annual tax bill is $1,800. Closing is on April 10. What is the seller’s share of the taxes?
Daily amount = ($1,800 ÷ 365) = $4.93
Jan 1 thru April 10 = (31 + 28 + 31 + 10) days, or 100 days
Proration = $4.93 x 100 days = $493 seller’s share
53
A property listed for $650,000 receives an offer for $610,000. This offer’s percentage of the listing price is what?
$610,000 ÷ $650,000 = 93.8%
54
A seller requires a 2.5% deposit on a property listed for $400,000. The required deposit (assuming a full price offer) is what?
$400,000 x 2.5% = $10,000
55
A buyer will receive a utilities bill for an estimated $400 at the end of the month. At closing, the seller has used an estimated $100 of the bill. What should appear on the closing statement?
A credit to the buyer for $100 and debit to the seller for $100
If a property is sold with outstanding bills in arrears, the buyer must be credited the portion of the bills owed by the seller by debiting the seller. In this scenario the $100 used by the seller.
56
A borrower receives a mortgage for a 30 year loan with a principal balance of $225,000, a payment of $1245, and at an interest rate of 4.25%. If she makes 2 payments on the loan, what will her principal balance be after the second payment is applied?
$224,102.17
Principal Balance $225,000 X .0425 Interest = 9562.50 annual interest ÷ 12=796.88 first month’s interest; $1245-$796.88 = $448.12 principal; $225,000 - 448.12 = new principal balance $224,551.88 $224,551.88 X .0425 Interest = 9543.4549 annual Interest ÷ 12= $795.29 second month’s interest; $1245-$795.29 = $449.71 principal; $224,551.88 - 449.71 = new principal balance $224.102.17
57
A seller received a monthly rental payment of $3,000 in advance. At closing, the seller has earned only $900 of this rent. What should appear on the closing statement?
A debit to the seller for $2,100 and a credit to the buyer for $2,100.
58
A home costing $540,000 is worth $588,000 two years later. What is the one-year appreciation rate?
Appreciation = current value - original price. Annual appreciation rate = (appreciation / price) / number of years, or $588,000 - $540,000 = $48,000 / $540,000 = 0.088 rate / 2 years = 0.044, or 4.4%.
59
The subject has $8,000 pool and a $2,000 chimney but no porch. A comparable that sold for $199,000 has a $3,000 porch but no pool or chimney. Assuming all else is equal, what is the adjusted value of the comparable?
$199,000 (+8,000 + 2,000 - 3,000) = $206,000
60
Seller Trevor receives an offer of $181,000 on a property he listed at $193,000. The property has been appraised at $198,000. How much is the offer as a percent of the listing price?
93.8%
61
Christine has monthly loan payments of $1,857. Her loan is for $300,000 @ 6.3% interest. How much of her first payment goes towards interest?
Principal paid = monthly payment - (loan amount x rate / 12), so interest paid = monthly payment - principal paid. $300,000 loan x 6.3% = 18,900 / 12 = 1,575. $1,857 payment - $1,575 = $282 principal paid. Interest = $1,575.
62
If an investor wants to combine a 5/8 acre parcel with a 3.9 acre parcel, how big will the parcel be, expressed as a decimal?
4.525 acres
63
If the monthly rent of a property is $4,000, and the Gross Rent Multiplier (GRM) is 91, what is the value of the property?
$364,000
$4,000 X 91 = $364,000
64
A lender determines that a homebuyer can afford to borrow $220,000 on a mortgage loan. The lender requires an 85% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount (to the nearest $1,000)?
$259,000
220,000 / .85
65
Land sells for $9,000 an acre. What will 750,000 SF of land sell for? Round to the nearest thousand.
155,000
750,000 / 43560 = 17.22
17.22 X 9,000 = 154,980
66
A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $48,000, vacancy and credit losses of $3,600, and operating expenses of $15,000. Using a capitalization rate of 8%, what is the property’s value (rounded up to the nearest $1,000)?
368,000
48,000 - 3600 - 15,000 = 29,400
29,400 / .08 = 367,500
67
A tax rate on a building with a $530,000 taxable value is 4.5 mills per thousand dollars of assessed valuation. What is the annual tax liability?
$530,000 ÷ 1,000 = $530, $530 x 4.5 = $2,385
68
A seller of a property, listed at $200,000, accepted a 90% offer. The home appraised at $185,000 and the buyers obtained a loan for 85% for 30 years at 5% interest. What is the first month's interest?
637.50
69
Stacey owns a lot that has 180 feet of front footage and contains 36,000 square feet. He purchases two identically-sized lots adjacent to each side of his lot. These side lots are each 200 feet deep and each side lot contains 19,000 square feet. What is the total front footage of all three lots?
370
70
A homeowner bought a house one year ago for $250,000. Since then, the homeowner has spent $4,000 to pave the driveway and has added a screen porch at a cost of $3,000. Total depreciation has been $6,000. What is the homeowner's adjusted basis?
251,000
71
The current value of a property is $60,000. For real estate tax purposes, the property is assessed at 30 percent of its current value, with an equalization factor of 1.25 applied to the assessed value. If the tax rate is $4 per $100 of assessed valuation, what is the amount of tax due on the property?
$60,000 current value x 0.30 assessment rate = $18,000 assessed value; $18,000 x 1.25 equalization factor = $22,500. Convert $4.00 to a decimal by moving the decimal two spaces to the left. $4.00 becomes 0.04. Multiply $22,500 by 0.04 = $900 annual property taxes.
72
A buyer secured a $125,000 loan at 4.5% interest rate. To receive a lower interest rate, the buyer was required to buy down three discount points. How much were the discount points?
3750
73
Sean, age 37, sold the home he purchased three years ago and now rents an apartment. He had originally purchased his home for $86,500 and sold it for $115,300. What is Sean's capital gain?
28,800
74
Shelly bought a house five years ago for $150,000 and obtained an 80% loan. Now the home is worth $140,000 and her loan balance has been reduced by $12,000. What is Shelly's current equity?
32,000
75
Amy agreed to a contract price of $100,000 for a home and secured a mortgage loan for $80,000. If the appraised value is $110,000, what is the loan to value ratio?
80%
76
Anne obtains a new loan @ 80% of her home’s price of $740,000. The loan constant is 5.645. What is Anne's monthly payment?
3342
77
Phillip advised his clients they needed to paint their master bedroom before showing the property. The walls of this room were 11’ high. The wall lengths were 13’, 19’, 13’, and 17’. If a gallon of paint covers 180 SF, how many whole gallons would the homesellers have to buy?
4 gallons
(13 x 11) x 2 = A
(19 + 17) / 2 = B
(B x 11) x 2 = C
C + A / 180 = Total Gallons
78
Tyler Holdlong owns a small retail property that he inherited from his father. There are no mortgages or interest expenses connected with the property. Tyler takes an annual cost recovery expense of $3,000. The property has a monthly gross income of $3,500 and monthly operating expenses of $1,100. Tyler's taxable income from this property will be taxed at a rate of 25%. What is the tax liability for the year?
6450
79
A lender offers an investor a maximum 85% LTV loan on the appraised value of a property. If the investor pays $160,000 for the property how much will the investor have to pay as a down payment?
24000
80
A farmer wants to net at least $10,000/acre on the sale of his 80-acre property. If he allows for a total of 10% for commissions and closing costs, what should his listing price be per acre? Assume the farmer has no mortgage.
(Desired net + closing costs) / (1 = commission rate) = sale price, so $10,000 desired net / (1 - .10 commission rate =) .90 = $11,111 sale price per acre.
81
An investor paid $43,000 for a lot and $520,000 to have a strip mall constructed on it. He has depreciated the property for the past 15 years on a 39-year straight-line schedule. If he sells the property this year and realizes $710,000 after closing expenses, what is his capital gain?
Depreciable basis/depreciation term x number years = total depreciation. Depreciable basis - total depreciation = adjusted basis. Amount realized = adjusted basis = capital gain. So, 520,000 depreciable basis / 39 term = $13,333.33 x 15 years = $200,000 total depreciation. $520,000 - $200,000 = $320,000 adjusted basis. $320,000 plus land of $43,000 = $363,000. $710,000 amount realized - $363,000 = $347,000. Depreciation ( basis) : $520,000 + $43,000= 563,000-$43,000=$520,000. Note: Land does not depreciate for accounting purposes, that’s why it is removed from the depreciated basis and added to the adjusted basis. The adjusted basis is the full investment in the project. Total Depreciation: $520,000*39= $13,333.33 x 15 years = $200,000. Adjusted basis: $520,000+$43,000 (beginning basis or original investment) -$200,000=$363,000. Amount realized= 710,000 (sold). Capital gain: $347,000
82
A buyer will receive a power bill for an estimated $140 at the end of the month. At closing, the seller has used an estimated $67 in power. What should appear on the closing statement?
Credit the buyer $67 and debit the seller $67
83
An apartment complex generates $905,000 in Effective Gross Income and $14,000 in other income. The same complex has $415,000 in operating expenses and $39,000 as reserves. What is the Net Operating Income of the complex?
Effective Gross Income + other income - operating expenses - reserves = NOI, so $905,000 EGI + $14,000 other = $919,000 GOI - $415,000 operating expenses - $39,000 reserves = $465,000 NOI.
84
A property sells for $140,000 two years after it was purchased. If the annual appreciation rate is 6%, how much did the original buyer pay for it?
124,599.50
Formula: Appreciated Value = Beginning Value X (1 + Annual Rate) X (1 + Annual Rate) . . .
for the number of years in question.
85
A property has sold for $185,000. The listing agreement calls for a commission of 6.5%. The listing broker and selling broker agree to share the commission equally. What will the listing agent receive if the agent is scheduled to get a 65% share from his broker?
3908
86
The lender quotes closing costs of $800 plus 2 points on a $610,000 loan. How much will the borrower have to pay?
13,000
87
If Mike decides to put his broker's license in temporary retirement, is he required to continue to carry E&O insurance?
No
88
Which of the following property types is exempt from laws relating to landlords and tenants in Tennessee?
An apartment building that rents one and two bedroom apartments.
89
If a rectangular office space is 72 feet wide and has a 410-foot perimeter, what is its area?
9576
90
A building has 9 apartments generating annual potential rent of $1,500 each month. Vacancy = 6% and annual expenses are $84,000. Vending machines yield $1,800 per year. What is the NOI?
70,080
91
Dan is buying Jessica’s house. The closing date (day belongs to seller) of the sale transaction is March 9th. Current year real estate taxes are $1,900 (will be billed to Dan next year). Use the 365-day method for prorating. What is Jessica's share of the real estate taxes for the current year?
359
| 354
92
A property's taxes are $9,540 and are paid for in arrears. The property was sold, and closing took place on March 7. The seller was responsible for the day of closing. Using the 360 day method, how will taxes be prorated?
Credit the buyer $1775.50 and Debit the Seller $1775.50
93
A developer wants to develop a 18-acre subdivision. He figures that the streets and common area will take up about 20% of this overall area. If the minimum lot size is to be 10,000 SF, how many lots can the developer have on this property?
18 (15)
94
A property is being appraised by the Cost Approach. The appraiser estimates that the land is worth $33,000 and the replacement cost of the home is $110,000. A new $20,000 garage was recently added. Total depreciation from all causes is $7,000. What is the indicated value of the property?
156,000
95
A town has a tax base of $411,000,000 and a budget of $850,000. What is the tax rate in terms of mills?
2.1 mills
96
Natalie wants to make a 25% profit on her $70,000 land investment (there is no mortgage). She figures agents charge a 6% commission, and that closing costs will be an additional $1,200. What should she accept as a final sale price (to the nearest hundred)?
94,400
97
Which would need a real estate license?
A person acting under a power of attorney for another.
An attorney opening a real estate office.
An attorney disposing of land for a client.
A person acting as a receiver in a bankruptcy.
An attorney opening a real estate office.
98
Tyler Holdlong owns a small retail property that he inherited from his father. There are no mortgages or interest expenses connected with the property. Tyler takes an annual cost recovery expense of $3,000. The property has a monthly gross income of $3,500 and monthly operating expenses of $1,100. Tyler's taxable income from this property will be taxed at a rate of 25%. What is the tax liability for the year?
NOI - cost recovery expense - operating expenses = taxable income x tax rate = tax liability, or $3,500 NOI x 12 = $42,000 annual NOI - $3,000 cost recovery - ($1,100 x 12 =) $13,200 operating expenses = $25,800 taxable income x 25% = $6,450 tax liability.
99
If a real estate broker is successfully sued in a court regarding a real estate transaction, he/she must notify the commission within
60 days
100
Affiliate broker Dole decides to sell his house. He lists it with his own company, ABC Realty. The sign in the front yard must contain which information?
ABC Realty
101
Who orders money to be paid from the Recovery Fund?
A court
102
Which of the following property types is exempt from laws relating to landlords and tenants in Tennessee?
An apartment building that rents one and two bedroom apartments.
A single family house managed by a property management firm.
A unit in a four plex where the landlord is an occupant in one of the units.
A condominium or cooperative unit.
A condominium or cooperative unit.
103
A developer wants to develop a 18-acre subdivision. He figures that the streets and common area will take up about 20% of this overall area. If the minimum lot size is to be 10,000 SF, how many lots can the developer have on this property?
62
18 acres - 20% = 18 x .20 = 3.6 acres for streets and common area, leaving 14.4 acreas for lots (18 - 3.6 = 14.4). 43,560 SF per acre x 14.4 acres = 627,264 SF. 627,264 SF / 10,000 SF per lot = 62.7 or 62 full lots.
104
The maximum amount of claims against any one licensee that the Recovery Fund will pay out over a period of years is:
30,000
105
The holder of a reciprocal (nonresident) real estate license must:
establish a main place of work in Tennessee or be licensed under a Tennessee broker.
take all education course requirements in Tennessee.
be licensed as a broker or affiliate broker in any state.
file with the commission an irrevocable consent agreement.
file with the commission an irrevocable consent agreement.
106
Jane Smith listed and sold a company’s building, for which the company paid her a fee. Which would be TRUE regarding this situation?
Jane Smith would not need a real estate license as companies are exempt.
Jane Smith would need a real estate affiliate broker’s license.
Jane Smith would need a real estate broker’s license.
Jane Smith would not need a real estate license since it was commercial property.
Jane Smith would need a real estate broker’s license.
107
What action may the Tennessee Real Estate Commission take against a person who engages in regulated real estate activities without a license?
Impose a fine of $1,000 per violation.
Issue a bench warrant.
Impose a fine of four times the amount of money they received illegally.
None. The Commission has no authority over unlicensed persons.
Impose a fine of $1,000 per violation.
108
A property's taxes are $9,540 and are paid for in arrears. The property was sold, and closing took place on March 7. The seller was responsible for the day of closing. Using the 360 day method, how will taxes be prorated?
No clue
109
If a rectangular office space is 72 feet wide and has a 410-foot perimeter, what is its area?
9576 ?
110
A property is purchased for $480,000. The land is valued at 10% of the initial purchase price of the property. Given a 39-year depreciation term, what is the annual depreciation expense?
Annual depreciation = beginning depreciable basis (initial property value + capital improvements - land value) / depreciation term. So, ($480,000 - $48,000 land value) / 39 years = $11,076.9 or $11,077.
111
A property is being appraised by the Cost Approach. The appraiser estimates that the land is worth $33,000 and the replacement cost of the home is $110,000. A new $20,000 garage was recently added. Total depreciation from all causes is $7,000. What is the indicated value of the property?
?
112
Natalie wants to make a 25% profit on her $70,000 land investment (there is no mortgage). She figures agents charge a 6% commission, and that closing costs will be an additional $1,200. What should she accept as a final sale price (to the nearest hundred)?
87,641
113
If a real estate broker is successfully sued in a court regarding a real estate transaction, he/she must notify the commission within _____ days.
60 days
114
The maximum amount of claims against any one licensee that the Recovery Fund will pay out over a period of years is:
$30,000
115
Jane Smith listed and sold a company’s building, for which the company paid her a fee. Which would be TRUE regarding this situation?
Jane Smith would need a real estate broker’s license
116
A property's taxes are $9,540 and are paid for in arrears. The property was sold, and closing took place on March 7. The seller was responsible for the day of closing. Using the 360 day method, how will taxes be prorated?
Divide the tax bill by 360 ($9540/360 = 26.50) to get your daily rate. Add up how many days the seller is responsible for (30 in Jan, 30 in Feb, + 7 in March=67). Multiply the daily rate by the number of days ($26.50 x 67 = $1775.50).
117
Affiliate broker Dole decides to sell his house. He lists it with his own company, ABC Realty. The sign in the front yard must contain which information?
ABC Realty.
118
Natalie wants to make a 25% profit on her $70,000 land investment (there is no mortgage). She figures agents charge a 6% commission, and that closing costs will be an additional $1,200. What should she accept as a final sale price (to the nearest hundred)?
$94,400
(Desired net + closing costs + investment) / (1 = commission rate) = sale price, so $70,000 x 25% = $17,500 desired net + $1,200 closing costs + $70,000 investment = $88,700 / (1 - .06 commission rate =) .94 = $94,361, or $94,400 to nearest hundred.
119
The holder of a reciprocal (nonresident) real estate license must:
file with the commission an irrevocable consent agreement.
