NJ Real Salesperson Exam Vocabulary & Math Formulas Flashcards
New Jersey State Real Estate Salesperson
Fee Simple Absolute:
Most complete ownership, inheritable.
Fee Simple Defeasible:
Ownership with conditions, can be lost if conditions aren’t met.
Life Estate:
Ownership for the duration of a person’s life.
Estate for Years:
Specific start and end date, survives death or property sale.
Periodic-Tenancy:
Renews automatically (e.g., month-to-month).
Tenancy at Will:
No fixed term, can be terminated by either party.
Tenancy at Sufferance:
Tenant stays beyond lease term without landlord’s permission.
Joint Tenancy:
Right of survivorship (ownership passes to surviving joint tenants). Requires four unities:
Time (acquired at the same time)
Title (acquired by the same deed)
Interest (equal ownership shares)
Possession (equal rights to possess the entire property)
Tenancy in Common:
No right of survivorship (ownership passes to heirs).
Can have unequal ownership shares.
Tenancy by the Entirety:
Only for married couples, right of survivorship.
Fiduciary Duties:
Care: Protect the client’s best interests.
Loyalty: Prioritize the client’s needs above your own.
Obedience: Follow the client’s lawful instructions.
Disclosure: Disclose all material facts about the property.
Accounting: Handle client funds with honesty and transparency.
Seller’s Agent:
Represents the seller.
Buyer’s Agent
Represents the buyer.
Dual Agency
: Represents both the buyer and seller (requires informed consent from both parties).
Sub-Agency:
Occurs when a cooperating broker represents the seller through the listing broker.
Listing Agreements
Contracts between the seller and the broker.
Exclusive Right-to-Sell:
Broker gets paid regardless of who finds the buyer.
Exclusive Agency:
Broker gets paid if they find the buyer, but not if the seller finds their own.
Open Listing:
Sellers can list with multiple brokers; only the broker who finds the buyer gets paid.
Buyer Representation Agreements
Contracts between the buyer and the broker.
Purchase Agreements:
Contracts between the buyer and the seller.
Mortgage:
Loan secured by real property.
Down Payment:
Portion of the purchase price paid upfront.
Points:
Fees paid to the lender to lower the interest rate (each point is 1% of the loan amount).
Closing Costs:
Expenses incurred in transferring property ownership (e.g., appraisal fees, title insurance, attorney fees)
Sales Comparison Approach:
Compare the subject property to similar recently sold properties.
Cost Approach:
Estimating the cost to rebuild the property minus depreciation
Income Approach
Estimating the potential rental income of the property.
Fair Housing Act of 1968:
Prohibits discrimination based on race, color, religion, national origin, sex, disability, and familial status.
Easement:
The right to use another person’s land for a specific purpose (e.g., right-of-way).
Lien:
A legal claim against property to secure a debt (e.g., mortgage, property tax lien).
Encroachment:
Unauthorized intrusion of a structure or improvement onto another person’s property
Adverse Possession:
Acquiring title to property by open, notorious, hostile, and continuous use for a statutory period.
Real Estate Commission
The governing body for real estate licensees in New Jersey.
License Requirements:
Pass the state and national exams.
Complete required education courses.
Meet character and fitness requirements.
Eligibility Requirements:
Be at least 18 years old.
High school diploma or GED equivalent.
Complete a 75-hour pre-licensing course.
Pass the NJ Real Estate Salesperson Exam.
Submit fingerprints for a criminal background check.
Obtain sponsorship from a licensed NJ broker.
License Renewal:
Renew every two years.
Complete 12 hours of Continuing Education (CE) courses (2 hours ethics, 6 hours core topics).
Environmental Issues
Asbestos, radon, lead paint, underground storage tanks.
Wetlands and floodplain restrictions.
The NJ Department of Environmental Protection (DEP)
oversee environmental regulations
Frontage:
Linear measurement of the property along the street.
Proration:
Adjustments made at closing to allocate costs or income between the buyer and seller (e.g., property taxes, insurance).
Capitalization Rate
Used to estimate the value of an income-producing property
Return on investment (ROI)
The ROI is calculated by dividing the final value minus the initial cost by the cost. ROI Formula: (Final Value – Initial Cost) / Cost = RO
Price to rent ratio
The price to rent ratio is calculated by dividing the median home price by the median annual rent.
Depth
Measurement of property from the front to the rear.
Broker Price Opinion
An estimate of a property’s value prepared by a licensed real estate broker.
Comparative Market Analysis (CMA)
A tool used to estimate a property’s value based on similar properties that have sold, are on the market, or were listed but didn’t sell.
Riparian Rights
The rights of property owners to access and use water from a river or stream adjacent to their land.
Fixture
An item of personal property that has been permanently attached to real estate, making it part of the property.
Variance
An exception to zoning regulations granted to a property owner.
Building Code:
Regulations specifying construction standards for buildings to ensure safety.
Chain of Title:
A history of ownership for a specific property.
Cloud on Title:
Any claim or encumbrance that may impair the title to real property.
Condominium
A property where individual units are owned separately, and common areas are shared.
Cooperative (Co-op):
A building owned by a corporation where residents own shares in the corporation instead of owning their unit.
Multiple Listing Service (MLS):
A database of properties for sale shared among brokers.
Metes and Bounds:
A method of describing land using boundaries and measurements.
Judgment Lien
A court-ordered lien on property to satisfy a debt.
Option Contract
: A contract giving one party the right to buy or lease property within a specified time
Origination Fee:
: A fee charged by a lender for processing a loan application.
Package Mortgage:
A mortgage covering both real and personal property.
Partially Amortized Loan:
: A loan with regular payments and a balloon payment at the end.
Percentage Lease:
: A lease where rent is based on a percentage of sales.
Homeowners Association (HOA)
An organization managing a residential community’s common areas.
Hypothecation:
Pledging property as security for a loan without surrendering possession.
Implied Agency:
An agency relationship created through actions rather than a formal agreement.
Hypothecation:
Pledging property as security for a loan without surrendering possession.
Improvements
Additions to the land, such as buildings or landscaping, that increase value.
Lis Pendens
A notice of a pending lawsuit involving property.
Marketable Title:
A title free from significant defects.
Mechanic’s Lien
A lien placed on a property for unpaid construction or repair work.
Novation:
Replacing an old contract with a new one.
Option Contract:
: A contract giving one party the right to buy or lease property within a specified time.
Power of Attorney:
A legal document authorizing someone to act on another’s behalf
Prepayment Penalty
fee for paying off a loan early.
Principal
The original loan amount or the main party to a transaction.
Real Estate Investment Trust (REIT):
A company owning, operating, or financing real estate.
Real Property
Land and anything permanently attached to it.
Restrictive Covenant:
A limitation on property use in a deed.
Right of First Refusal:
he right to purchase property before others.
Riparian Rights:
Water rights for landowners adjacent to a river or stream.
Title Insurance:
Insurance protecting against title defects or ownership disputes.
Ad Valorem Tax:
A property tax based on the assessed value of the property.
Accrued Depreciation:
The loss in value of a property over time due to physical wear, functional obsolescence, or external factors.
Loan-to-value ratio
Loan Amount / Assessed Value of the Property = Loan to Value Ratio
Down payment
Sale Price x Percentage Payment = Down Payment Amount
Capitalization rate
Net Operating Income / Purchase Price = Capitalization Rate
Return on investment (ROI)
(Final Value – Initial Cost) / Cost = ROI
Monthly mortgage payment
P [ i(1 + i)^n ] / [ (1 + i)^n – 1] = M
M = monthly mortgage payment
P = loan amount
i = monthly interest rate
n = number of payments (assume 30-yr, fixed)
Price to rent ratio
Median Home Price / Median Annual Rent = Price to Rent Ratio
Prorated taxes
By identifying the number of days remaining in the year and dividing it by 365, you’ll get the percentage of the tax bill that your buyer will need to pay.
70% Rule
(ARV) x .70 − Estimated repair costs = Maximum buying price
The 28 / 36 rule (Qualification Ratio)
The 28 in this rule suggests the home buyer can qualify for 28% of their gross monthly income
On the other hand, the 36 in this home buyer rule considers your client’s additional debt payments
