PA Real Estate U Practice pt.2

Question 1

The responsibility of the broker to an independent contractor salesperson

Answer 1

Supervision, reporting salesperson’s commission to the IRS, providing salesperson with independent contractor agreement

Question 2

Terry has just sold a $900,000 home for their client. The listing agreement state that Terry would recieve a 6% commission. Terry agreed to do a 50/50 split with the buyer’s broker. What is the final broker’s commission that Terry will recieve after the split with the buyer’s broker?

Answer 2

900,000 * .06 = 54,000 / 2 = 27,000

Question 3

Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.

Answer 3

Closing

Question 4

A property recently sold for $480,000. What is the commission owed if the seller agreed to a 4% commission rate?

Answer 4

480,000 * .04 = 19,200

Question 5

First-time home buyers want to buy a house they can afford. They have no idea what they might qualify for, and their agent said they should get pre-qualified before they begin looking at houses. Who do they need to talk to?

Answer 5

A mortgage broker or banker

Question 6

As a means to exercising precaution, an agent should have a prospective buyer do this before viewing a property

Answer 6

Obtain a pre-approval from a lender

Question 7

the supply of willing and able consumers, which can be few or numerous.

Answer 7

Demand

Question 8

Lays out both the obligations of the broker and the duties of the salesperson

Answer 8

independent contractor agreements

Question 9

What type of property is a factory considered?

Answer 9

Industrial

Question 10

What form of payment does the IRS allow a broker to pay their salespeople?

Answer 10

A percentage of commission received from a transaction the salesperson has worked on.

Question 11

Where should an agent meet with a prospective buyer prior to showing any properties?

Answer 11

At the agent’s office.

Question 12

What factors can affect the definition of zoning definitions?

Answer 12

The community, county, or state the property is in.

Question 13

The amount of a certain good or service that is available in the market is known as what?

Answer 13

Supply

Question 14

For real estate agents, liability insurance is written on a ___ basis

Answer 14

by-claim

Question 15

A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.

Answer 15

Chain of title

Question 16

A summary of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impai title.

Answer 16

Abstract of Title

Question 17

A title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept

Answer 17

Marketable Title

Question 18

An attorney’s written evaluation of the condition of the title to a parcel of land after examination of the abstract of title

Answer 18

Opinion of Title

Question 19

Insurance to protect a real property owner or lender up to a specified amount against certain types of loss, e.g. defective or unmarketable title.

Answer 19

Title Insurance

Question 20

Lauren has just acted as salesperson for the seller on a $450,000 home, with a 6% commission. The buyer’s broker on the sale had agreed to a 50/50 split, and Lauren has a 50/50 split with her broker. How much money will Lauren receive from this transaction?

Answer 20

450,000 * .06 = 27,000 *.05 = 13,500 * .05 = 6,750

Question 21

A person or organization acting as the agent for others in negotiating the purchase and sale of real property for a fee is known as:

Answer 21

Real estate broker

Question 22

A salesperson and their sponsoring broker agree to a 50/50 commission split. If a property sells for $520,000 with a 6% commission, how will the salesperson earn on the deal if the broker also splits the comission with the buyer’s broker at 50%?

Answer 22

520,000 * .06 = 31,200 *.50 = 15,600 * .50 = 7,800

Question 23

An agreement between members of a trade to exclude other members from fair participation in the trade.

Answer 23

Group Boycott

Question 24

Conspiring to establish fixed fees or prices for services or products

Answer 24

Price fixing

Question 25

An agreement between members of a trade to refrain from competition in specific market areas

Answer 25

Market allocation

Question 26

Federal legislation including the imposition of civil and punitive damages for anti-trust activities.

Answer 26

Sherman Anti-Trust Act

Question 27

A contract where one transaction depends upon another

Answer 27

Tie-in Arrangement

Question 28

The practice on the part of unscrupulous speculators or real estate agents of including panic selling of homes at prices below market value, especially by exploiting the prejudices of property owners in neighborhoods in which the racial make-up is changing or appears to be on the verge of changing.

Answer 28

Blockbusting

Question 29

An illegal lending policy of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks without due consideration being given by the lending institution to the credit worthiness of the individual loan applicant.

Answer 29

Redlining

Question 30

A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development

Answer 30

Real Estate Settlement Procedures Act (RESPA)

Question 31

The practice in which real estate brokers guide prospective home buyers towards or away from certain neighborhoods based on their race. This practice is highly illegal.

Answer 31

Steering

Question 32

Volunteers from state or private agencies who enforce fair housing by claiming to be home seekers, thereby finding out of brokers deal fairly with all clients/customers

Answer 32

Testers

Question 33

Houses in Bellvue have a history of selling for over $200,000, but the market has hit a slump recently. Over the last 12 months, the average sale price has dropped to under $150,000. A group of real estate agents get together and decid that none of them will sell a Bellvue home for less than $200,000. This is considered what type of illegal activity?

Answer 33

Price Fixing

Question 34

Under the Fair Housing Act, it is illegal to deny entry into what?

Answer 34

the MLS

Question 35

If a lender refuses to lend money to purchase a home in a specific area based only on the demographic makeup of the neighborhood, they could be accused of what?

Answer 35

Redlining

Question 36

The Fair Housing Amendments Act of 1974 made it illegal to discriminate on the basis of what?

Answer 36

Sex

Question 37

A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creating of or addition to a liability or item of equity or revenue.

Answer 37

Credit

Question 38

Adjustments of interest, taxes, and insurance, etc., on a pro rata basis as of the closing or agreed upon date.

Answer 38

Proration

Question 39

Penalties for violating an anti-trust law include:

Answer 39

Up to three years in jail, up to a $1M fine for a business, _or_ up to a $100,000 fine for an individual

Question 40

In order to be exempt from the FHA, a single family homeowner can sell or rent one home in how many years?

Answer 40

2 years

Question 41

These 4 types of property are not covered by the FHA

Answer 41

-Owner-occupied buildings with 4 or fewer units. -Single-family homes sold or rented directly by owner if they own no more than 3 such homes -Housing operated by religious org or private clubs -Certain senior housing meeting specific criteria

Question 42

The Pennsylvania Human Relations Act is administered and enforced by:

Answer 42

Pennsylvania Human Relations Commission

Question 43

Created to help enforce the Sherman and Clayton Anti-Trust Laws

Answer 43

The Federal Trade Commission Act

Question 44

A neighborhood in a city has suddenly become very popular. The area had previously been primarily served by two established real estate agencies, but the surge in popularity has brought more agents wishing to do business in the area. The two established agencies agree to only share listings with each other, and not with any of the newer agencies that have come to the neighborhood. What are the two agencies guilty of?

Answer 44

Group Boycott

Question 45

The practice of panic selling of homes at prices below market value, especialy by exploiting the prejudices of property owners in neighborhoods in which the racial make-up is changing or appears to be on the verge of changing.

Answer 45

Blockbusting

Question 46

According to RELRA, how old must one be to become a real estate broker?

Answer 46

21

Question 47

An illegal lending policy of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks without due consideration being given by the lending institution to the credit worthiness of the individual loan applicant

Answer 47

Redlining

Question 48

The exemption under the FHA that applies to buildings with four or fewer units in which the owner lives in one of the unit us often referred to as:

Answer 48

The Mrs. Murphy exemption

Question 49

Housing for Older Persons Act (HOPA) defined housing for older people who are what age?

Answer 49

55 and up

Question 50

A change to a building or facility that affects or could affect the usability of the building or facility or portion thereof. Include, but are not limited to, remodeling, renovation, rehabilitation, reconstraction, historic restoration, resurfacing of circulation paths or vehicle ways, changes or rearrangement of the structural parts or elements, the plan configuration of walls or full-height partitions.

Answer 50

Alteration

Question 51

Guidelines drafted by the Access Board that describe the minimum requirements that a building should exhibit in order to be accessible

Answer 51

Americans with Disabilities Act Accessibility Guidelines (ADAAG)

Question 52

Federal agency designated to enforce the Fair Housing Act (FHA)

Answer 52

Department of Housing and Urban Development (HUD)

Question 53

Federal agency that has the authority to enforce all provisions of the Americans with Disabilities Act (ADA), but focuses primarily on ADA Title II: public services by State and local government) and ADA Title III: public accomodations

Answer 53

Department of Justice (DOJ)

Question 54

A physical or mental impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment:

Answer 54

Disability

Question 55

A continuous, unobstructed way of pedestrian passage by means of which the altered area may be approached, entered, and exited, and which connect the altered area with an exterior approach (including sidewalks, streets, and parking areas), an entrance to the facility, and other parts of the facility

Answer 55

Path of travel

Question 56

Areas housing the major activities for which a facility was intended. Areas include, but are not limited to: the customer services lobby of a bank, the dining area of a cafeteria, the meeting rooms in a conference center, etc.

Answer 56

Primary function areas

Question 57

Private entities that own, operate, lease or lease to places of public accomodation. Places include: restaurants, hotels, theaters, convention centers, retail stores, shopping centers, dry cleaners, etc.

Answer 57

Public accommodations

Question 58

A walking surface that has a running slope steeper than 1:20

Answer 58

ramp

Question 59

Easily accomplished and able to be carried out without much difficulty or expense

Answer 59

Readily achievable

Question 60

A unit intended to be used as a residence, and that is primarily long-term in nature.

Answer 60

Residential Dwelling Unit

Question 61

An approach to the design of products, places, policies, and services that can meet the needs of as many people as possible throughout their lifetime, regardless of age, ability, or station. AKA: 'inclusive design' or 'design for all'

Answer 61

Universal Design (UD)

Question 62

Covered by Title I of the ADA

Answer 62

Employment

Question 63

Covered by Title II of the ADA

Answer 63

Public Services: State and Local Government

Question 64

Covered by Title III of the ADA

Answer 64

Public Accommodation and Services Operated by Private Entities

Question 65

What is the length of a ramp that rises 12" and has a slope of 1:12

Answer 65

12' 0"

Question 66

A handicap parking space is required when more than how many parking spaces are provided in total?

Answer 66

more than 1 space

Question 67

What is the minimum clear floor space required for a handicapped individual?

Answer 67

30"x48"

Question 68

What is the minimum width of a handicapped van parking space?

Answer 68

132"

Question 69

What is the minimum clear width of a handicap ramp?

Answer 69

36"

Question 70

John needs to install an handicap ramp to make his building ADA compliant. What is the maximum allowable slope of a ramp?

Answer 70

1:12

Question 71

Mark would like to install an ADA compliant entrance door to his building. What is the required push-side clearance Mark must provide at tthe entrance door?

Answer 71

12"

Question 72

What year was the ADA signed into law?

Answer 72

1990

Question 73

What year was the ADA Amendments Act signed into law?

Answer 73

2008

Question 74

New construction or alterations that began construction on or after March 15th, 2012 must comply with what ADA document?

Answer 74

2010 ADA Standards for Accessible Design

Question 75

According to ADA, what is the maximum tread depth of a stair?

Answer 75

11"

Question 76

What is the minimum clear width of a walking surface?

Answer 76

36"

Question 77

What is the minimum 'pull-side' clearance at an accessible door?

Answer 77

18"

Question 78

What is the maximum slope of a curb ramp?

Answer 78

1:12

Question 79

What must be provided within residential units of buildings containing four or more units?

Answer 79

Accessible routes

Question 80

Your client would like to install a new ADA compliant lavatory in their bathroom. What is the maximum rim or countertop height of the lavatory?

Answer 80

34"

Question 81

What type of law is the ADA considered to be?

Answer 81

Civil Rights

Question 82

This document outlines the minimum requirements for newly designed and constructed or altered State and Local government facilities, public accommodations, and commercial facilities to be readily accessible to and useable by individuals with disabilities

Answer 82

2010 ADA Standards for Accessible Design

Question 83

The Americans with Disabilities Act affords similar protections against discrimination to americans with disabilities as what other set of laws?

Answer 83

Civil Rights Act of 1964

Question 84

What type of buildings are exempt from complying with ADA site requirements?

Answer 84

Utility buildings not open to the general public

Question 85

Accessible bathtubs must be installed with what kind of seat?

Answer 85

Permanent or removable seat

Question 86

What are required in bathrooms to help handicapped individuals maneuver in and out of a wheelchair?

Answer 86

Grab bars

Question 87

A handicap ramp is comprised of what two components?

Answer 87

the landing and the ramp run

Question 88

What are required for ramps that rise greater than 6"?

Answer 88

Handrails

Question 89

What is the maximum kitchen counter height in an accessible kitchen?

Answer 89

34"

Question 90

Why does the pull-side clearance at an accessible door require more space than the push-side?

Answer 90

More space is needed to open the door and maneuver backwards

Question 91

ADA Title that covers Telecommunications

Answer 91

Title IV

Question 92

What is the minimum width of an accessible pass-through kitchen?

Answer 92

40"

Question 93

Your client would like to install an ADA compliant toilet in their bathroom. What is the required seat height above the finished floor?

Answer 93

17" - 19"

Question 94

The Civil Rights Act of 1968 expanded the law of 1866 but still did not include the following:

Answer 94

Family Status

Question 95

If a claim is made accusing a person or entity of violating the Civil Rights Act, it goes directly to which organization?

Answer 95

Federal Court

Question 96

The Fair Housing Amendments Act of 1974 made it illegal to discriminate on the basis of:

Answer 96

Sex

Question 97

Recently, agents in a town have noticed that the commissions they have been able to negotiate with potential sellers have gotten lower and lower. A 6% commission has become impossible to negotiate, and many ar resorting to going below 3% to get listings. The three largest agencies in the town agree to not take any listinging for below 4% so that they can bring the average commission back up. What are they guilty of?

Answer 97

Price-fixing

Question 98

Under Megan's Law, agents should provide the following information to buyers:

Answer 98

The Megan's Law disclosure

Question 99

If an agent is found distributing fliers in a neighborhood, which encourages homeowners to sell their home due to a new religious group moving in, the agent would be accused of what activity?

Answer 99

Blockbusting

Question 100

A new start-up comes to a city and offers real estate services that make heavy use of technology and an app that has become popular that use the MLS service. The start-up offers potential clients the opportunity to sell their homes for just a 1.5% commission. The other brokerages in the city decide to pull all their listings from the MLS and create their own listing database. They are guilty of:

Answer 100

Group boycotts

Question 101

the Serman Anti-Trust Act was enacted in 1890 in order to:

Answer 101

to stop practices that restrain trade and to encourage competition in the marketplace

Question 102

This act supplemented the Sheman Anti-trust Act to prevent anti-competitive practices

Answer 102

The Clayton Anti-trust Act

Question 103

The relationship between a principal and the principal's agent, which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party,

Answer 103

Agency

Question 104

One who acts for and with authority from another called the principal

Answer 104

Agent

Question 105

A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent's principal

Answer 105

subagent

Question 106

An agency relationship in which the agent acts concurrently for both of the principals in a transaction

Answer 106

Dual Agency

Question 107

An agent with full authority over real property of the principal, for example: a property manager.

Answer 107

General Agent

Question 108

An agent who works only for the buyer or the seller

Answer 108

Single Agent

Question 109

An agent with limited authority to act on behalf of the principal, such as created by a listing contract

Answer 109

Special Agent

Question 110

The agent who has complete authority over any activity of the principal, for example: power of attorney

Answer 110

Universal agent

Question 111

An agency relationship created by oral or written agreement between the principal and the agent

Answer 111

Express Agency

Question 112

Agency that exists as a result of the actions of the parties

Answer 112

Implied Agency

Question 113

A person who has been given the appearance of being an employee or acting (agent) for another (principal), which would make anyone dealing with the ostensible agent reasonably believes they were an employee or agent

Answer 113

Ostensible Agency

Question 114

A person in a position of trust and confidence, as between principal and broker; broker as such owes a certin loyalty which cannot be breached under the rules of agency

Answer 114

Fiduciary

Question 115

That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress, or pressure

Answer 115

Fiduciary Duty

Question 116

An agent's duty to place the client's interest above those of all others, including the agent's own self-interest

Answer 116

Loyalty

Question 117

This fiduciary relationship obligates the agent to act in the good faith at all times, obeying the client's instructions in accordance with the contract.

Answer 117

Obedience

Question 118

The degree of caution and concern for the safety of themselves and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent

Answer 118

Reasonable Care

Question 119

OLD CAR

Answer 119

Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable Care

Question 120

An agent's compensation for performing the duties of an agncy, in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services

Answer 120

Commission

Question 121

Sydney's brother Lawrence is a real estate salesperson in a prestigious brokerage that is a member of several active MLS services. Sydney wants to sell her condo, and she wants to negotiate a listing agreement with her brother that will allow him to make 100% of the commission. What should she do?

Answer 121

Sydney should negotiate a listing agreement with Lawrence's broker. It's very unlikely she'll be able to get 100% for Lawrence, but she may be able to negotiate a listing agreement that gives Lawrence a significant split of any commissison as a subagent.

Question 122

Franz has been so helpful for Frank and Pat in finding the house of their dreams. He's shown them houses that are on the MLS listed with other agencies as well as listings he has in his office. When Frank and Pat talk about how stressful the search is, Franz says "don't worry, i've got your back" Frank and Pat believe Franz is working for them, but they've never discussed it directly. What is this an example of?

Answer 122

Implied Agency

Question 123

Leila is representing buyers, Steven and Angie. The buyer wants to place an offer on a home that is listed at $800,000. It's been on the market for over a year and the seller's broker mentioned that the owner would gladly take any offer that was over $700,000. Steve and Angie love the house and are worried that if they don't bid correctly, they might lose out. They think they should offer above asking price, and suggest putting in an offer of $825,000. What is Leila's responsibility to her clients?

Answer 123

It is Leila's responsibility to let Steve and Angie know that a much lower offer would very likely be accepted. She should mention how long the house has been on the market and the likelihood that an offer significantly below the asking price will likely be accepted.

Question 124

The broker is the ___, the subagent is the ___, and the principal is the ___

Answer 124

agent, salesperson, client

Question 125

You are required to protect your principal's secrets, unless it is unlawful to do so. If you know anything that can compromise your client's bargaining position, you have to keep ti to yourself and not share it with the other party to the transaction. This describes which duty to your client?

Answer 125

Confidentiality

Question 126

Bailey is a real estate salesperson working with Lenore who wants to buy a home, and who has signed a buyer's agreement with Bailey's office. Bailey shows Lenore a house, which her office has the exclusive listing on, but it will expire in less than a week. Lenore says it's not exactly what she's looking for, bt maybe she should just put an offer on it. Bailey saw a new listing on MLS that morning that sounds like it is exactly what Lenore was looking for. What should Bailey do?

Answer 126

Bailey should tell Lenore about the new listing

Question 127

In a strong rental market, agents are charging the renters for their fees. Justing rents a $2200 apartment and charges 10% of the annual rent as his fee. What commission has he earned on this rental?

Answer 127

$2640

Question 128

Ideally, what is the best type of agency relationship to enter into?

Answer 128

express agency

Question 129

A real estate salesperson operates as a ___ agent

Answer 129

Special

Question 130

A property manager operates as a ____ agent

Answer 130

general

Question 131

Why is dual agency problematic?

Answer 131

-If both parties are not made aware of it being in effect, then it is always illegal -It can occur without the agent realizing it -It makes it difficult for the agent to uphold their fiduciary responsibility to both principals

Question 132

A branch of the real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties

Answer 132

Property Management

Question 133

A person who manages properties for an owner as the owner's agent

Answer 133

Property Manager

Question 134

Items generally included in a property management proposal and/or contract for management services

Answer 134

description of the property length of agreement management authority financial reporting management fee accounting responsibilities insurance and risk management owner's responsibility and objectives termination terms

Question 135

A contract between the owner of a property and someone who agrees to manage it

Answer 135

Management agreement

Question 136

A document that sets forth the duties of the manager when employed by the owner

Answer 136

Management proposal

Question 137

Expenditures creating future value. Incurred when a property owner spends money to upgrade a building in an effort to add value and/or extend the useful life of the building.

Answer 137

Capital Expense

Question 138

Money set aside by a property owner for long-term capital expenditures to a property

Answer 138

Capital Reserve Budget

Question 139

A maintenance task performed to identify, isolate, and rectify a problem with a property so that the property can be restored to an acceptable condition

Answer 139

Corrective Maintenance

Question 140

An amount of money set aside by the owner for a specific period for the property manager to manage the property effectively

Answer 140

Operating Budget

Question 141

Keeping property and equipment in good state of repair so as to minimize the need for more costly repair work or replacement

Answer 141

Preventative Maintenance

Question 142

An accounting report issued periodically by the property manager to the owner outlining all income and expenditures for that accounting period

Answer 142

Property Management Report

Question 143

Property expenditures that vary depending on the operations of the property

Answer 143

Variable Expense

Question 144

Carol is a property manager who works closely with investors who have residential portfolios in a college town. When establishing the length of service terms, she understands that...

Answer 144

Length of service terms are flexible, and she must consider both her income and the owners' financial goals

Question 145

Rebecca manages a 300-unit multi-family complex that offers exceptional amenities, but has a less-than-stellar vacancy rate. She decides to host an open house to attract families with small children. The bounce-houses, cotton candy machine rental, door prizes, & food and beverage will cost about $3500. She checks her management authority guidelines to make sure she can spend this amount without owner approval as what kind of expense?

Answer 145

Advertising and Marketing

Question 146

John is a property manager who runs a large commercial property. What must John have knowledge of to preperly maintain the HVAC and electrical systems?

Answer 146

building systems

Question 147

A _____ is a group of independent businesses under one roof.

Answer 147

A mall

Question 148

Who is usually responsible for maintaining common areas like corridors, shared security offices, walkways, and elevators in a mall or shopping center?

Answer 148

The management company

Question 149

A document that sets forth the duties of the manager when employed by the owner

Answer 149

Management Proposal

Question 150

Type of expense incurred when a property owner spends money to upgrade a building in an effort to add value and/or extend the useful life of the building?

Answer 150

Capital Expense

Question 151

Why is it important to screen prospective tenants and to conduct credit and reference checks?

Answer 151

It is the best way to protect the owner's investment.

Question 152

What can the property manager legally ask for from a prospective tenant to confim that there are not financial issues that might be problematic?

Answer 152

Employment, previous rental history, credit history

Question 153

Meeting tenants' needs and addressing their concerns, resolving disputes fairly, and keeping the property maintained, safe, and desirable so that the owner's return on investment is as expected.

Answer 153

Tenant Relations

Question 154

Which fee typically covers basic services, like accounting, reporting, and tenant screening?

Answer 154

The management fee.

Question 155

What do supervisors need a general working knowledge of to properly maintain HVAC, electrical, and plumbing in a building?

Answer 155

building systems

Question 156

Property management positions with large firms often require what kind of degree to ensure candidates have a thorough knowledge of general accounting principles (GAO), financial reporting, and basic knowledge about day to day duties of operating a business

Answer 156

BA in Business Administration

Question 157

A maintenance task performed to identify, isolate, and rectify a problem with a property so that the property can be restored to an acceptable condition.

Answer 157

Corrective maintenance

Question 158

An amount of money set aside by the owner for a specific period for the property manager to manage the property effectively

Answer 158

Operating Budget

Question 159

The operational duties that include collecting, depositing and disbursing rent, and detailing expenses on operating statements

Answer 159

Manager accounting responsibilities

Question 160

Mall managers may offer special pricing and incentives to these types of stores because they attract more consumers with brand recognition

Answer 160

Anchor stores

Question 161

Three weeks after Justin signed a management agreement with a local property management company, a tornado ripped through the area, totally destroying the building. He should be able to get out of the contract if the agreement included what clause?

Answer 161

Early termination clause that requires the property to be habitable

Question 162

An estate in real property wherein there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map, or condominium plan

Answer 162

Condominium

Question 163

An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building.

Answer 163

Cooperative

Question 164

A structure transportable in one or more sections, designed and equipped to contain not more than two dwelling units to be used with or without a foundation system.

Answer 164

Mobile Home

Question 165

A system for the construction of dwellings and other improvement to real property through the on-site assembly of component parts (modules) that have been mass-produced away from the building site

Answer 165

Modular

Question 166

A form of sub-division of real property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real proerty, on an annual or some other periodic basis, for a specified period of time.

Answer 166

Time-Share

Question 167

Monetary gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which sold five years after it was purchased for 50% more than the purchase price.

Answer 167

Appreciation

Question 168

At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax compuations & are called "short" or "long" based upon the length of the holding period after acquisition. Usually taxed at a lower rate than ordinary income.

Answer 168

Capital gains

Question 169

A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.

Answer 169

Straight Line Depreciation

Question 170

The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.

Answer 170

Tax-Deferred Exchange

Question 171

Types of closing costs that are tax deductible are _____ & _____, while _____ are not tax deductible.

Answer 171

Discount Points & Loan Origination Fees / Origination Points

Question 172

Include charges for property inspections, a title search, lawyer fees, notary public services and other add-ons, all of which are not tax deductible items

Answer 172

Origination points

Question 173

Types of points that qualify as depreciation expenses, which can be amortized along with certain other expenses of buying, building, or improving real estate holdings over the life of the real property

Answer 173

Discount points and origination points

Question 174

Type of insurance coverage usually only required on conventional loans with a down payment less than 20% or a refinance with less than 20% equity.

Answer 174

Private Mortgage Insurance (PMI)

Question 175

What type of loan offers a low down payment option for home buyers?

Answer 175

FHA insured loan

Question 176

What happens if there is a tax for the city and the school district?

Answer 176

The tax rate is equal to the city tax plus the school tax

Question 177

Patty is working with a commercial real estate investor. While touring an older manufacturing property, the client mentions that much of the equipment will have to be updated in a few years because it is fast becoming obsolete. Which depreciation method did Patty most likely bring up during this discussion because it depreciates assets based on wear and tear, obsolescece, and damage?

Answer 177

Alternative Depreciation System

Question 178

Why do property buyers need to worry about tax liens?

Answer 178

They may be responsible for paying the lien after taking ownership of the property

Question 179

What types of properties are not subject to property taxes?

Answer 179

Government buildings, educational buildings, and nonprofit buildings

Question 180

Who is responsible for updating the assessed value of a property?

Answer 180

The local tax assessor

Question 181

What can a homeowner do if they feel their property is over assessed?

Answer 181

Protest the assessment

Question 182

George has done some research about insurance policies online. He is planning to add more rental properties to his portfolio this summer and asks his agent if she knows whether he will qualify for replacement value cost (RVC) NFIP coverage. How will the agent respond?

Answer 182

No, because in order to qualify for RVC coverage, George must live in a home 80% of the time.

Question 183

While explaining the differences in insurance options, Kelly tells a potential buyer that she has a homewners policy that covers the total loss up to a maximum value. So, if her home is covered, what will the insurance company do?

Answer 183

Reimburse her (or the morgage company) the maximum amount listed in her policy, regardless of repair costs.

Question 184

What type of tax statement includes assessments from a variety of agencies such as school taxes, water district taxes, road and bridge fees, and both city and county property taxes?

Answer 184

An annual combined appraisal district tax statement

Question 185

What type of tax statement includes assessments from a variety of agencies such as school taxes, water district taxes, road and bridge fees, and both city and county property taxes?

Answer 185

An annual combined appraisal district tax statement

Question 186

An investor has several multi-family buildings he wants to sell in the next year. His real estate agent tells him that he can force the appraised value to rise by doing what?

Answer 186

Adding amenity packages based on trends in the local area.

Question 187

A seller has accepted an offer from John. John wants to remodel and add an outdoor pool when he has enough equity built up to cover the project. Which loan arrangement will help him build equity faster than the others?

Answer 187

Making a 40% down payment upfront

Question 188

Don is a real estate agent working with a retired Marine who plans to purchase her first home. His client admits she doesn't have a large nest egg for a down payment but has an exceptional credit history and earns an above-average salary in a civilian job. Why would Don recommend a VA loan over an FHA loan?

Answer 188

The VA offers 100% financing

Question 189

What does 10 mills equal?

Answer 189

1 percent of the assessed value of the property

Question 190

What is the major difference between a mobile home and a modular home?

Answer 190

Modular homes are built on-site

Question 191

When should a property owner challenge an assessed value?

Answer 191

When they can back up the value of the home in another way

Question 192

What things can change the tax rate from year to year?

Answer 192

the budget needs of the local taxing jurisdiction.

Question 193

A list of the three most common homeowner policy coverage areas:

Answer 193

-Buildings -Building contents -Medical coverage for people who are hurt in the property

Question 194

Candice wants to buy a new home. She doesn't have a lengthy credit bureau file and s looking for a loan vehicle that will not require a large down payment. She is surprised to learn that the _____ considers non-borrower income and nontraditional credit sources when reviewing mortgage applications.

Answer 194

Fannie Mae HomeReady mortgage program

Question 195

Carolyn found a home that she can afford. It is not in a known flood plain, and she doesn't want to buy flood insurance since her mortgage lender doesn't require it. What reasons would her agent recommend purchasing flood insurance anyway?

Answer 195

-Policies are lower in low-risk areas -Coverage is minimal compared to the average residential claim related to flood damage -The price of the average flood insurance policy through NFIP is only $700/yr

Question 196

While talking to a client about non-federal tax liabilities, Dana mentioned local property taxes. She told her client that tax assessments are based on _____, but every district offers discounts to certain groups, such as people over 65 and permanently disabled individuals

Answer 196

Market Value

Question 197

What is a designated special assessment district?

Answer 197

An area responsible for paying a special tax assessment.

Question 198

A buyer is looking for a multi-family option that includes common area maintenace and will allow him to take advantage of tax incentives for homeowners. Why might his agent recommend he choose a condo over a co-op?

Answer 198

Cooperatives are never fully owned, you only purchase the exclusive right to use

Question 199

Peggy does not have any savings other than $126,000 in a 401k. what IRS rules will affect whether she can use any, or all, of her retirement fund to purchase a home?

Answer 199

-She can withdraw up to $50,000 to spend on a home purchase -She can use 401k savings for a down payment or to buy down points -She will avoid taxes and fees as long as she makes all payments on time, including interest

Question 200

Brenda has lived in her home for ten years. Her job is transferring her to another state, and she can't decide whether to convert her home to a rental property or sell it outright. Her real estate agent reminds her that if she sells her property, she can deduct mortgage origination points when reporting _____ on her federal taxes.

Answer 200

Capital Gains or Losses

Question 201

What is the millage rate?

Answer 201

It is the same thing as the tax rate

Question 202

The IBC classifies any structure with occupied living space higher than 75 feet above _____ as a high-rise building.

Answer 202

the lowest level of fire department access

Question 203

What types of property taxes are homeowners likely to pay?

Answer 203

Local government, county, and school district related taxes

Question 204

Most homeowners insurance policies cover specific events that fall into what two different categories?

Answer 204

Perils and non-perils

Question 205

How much can sellers offer in concessions for VA loans?

Answer 205

up to 4%

Question 206

David is talking to a prospective buyer about estimating how much money he will have to gather up prior to closing on a $312,000 home with a $250,000 loan. Assuming the PMI is 1%, how much should he add to cover the full PMI coverage?

Answer 206

250,000 * 0.01 = $2500

Question 207

Lisa is a real estate agent who also helps clients lease single-family homes. She advises every potential tenant to purchase HO-4, aka _____, because it is a perils content policy

Answer 207

Tenant Coverage

Question 208

A lien imposed by law upon a property to secure the payment of taxes

Answer 208

Tax Lien

Question 209

An assessment made against a property to pay for a public improvement by which the assessed property is supposed to be especially benefited

Answer 209

Special Assessment

Question 210

A geographic area in which the market value of real etate is enhanced due to the influence of a public improvement and in which a tax is apportioned to recover the costs of public improvement

Answer 210

Special Assessment Districts

Question 211

A horizontal structural element. Joists, trusses, and girders are examples of these

Answer 211

Beam

Question 212

A vertical structural element

Answer 212

Column

Question 213

A block of hardened concrete, with or without hollow cores, designed to be laid in the same manner as the brick or stone. Commonly used in load-bearing exterior walls

Answer 213

Concrete Masonry Unit (CMU)

Question 214

A thin, continuous sheet of metal, plastic, rubber, or waterproofing used to prevent the passage of water through a joint in a wall, roof, or chimney.

Answer 214

Flashing

Question 215

The widened part of a foundation that sperads a load from the building across a broader area of soil.

Answer 215

Footing

Question 216

The portion of a building that has the sole purpose of transmitting structural loads from the building into the earth

Answer 216

Foundation

Question 217

Depth in the earth to which the soil can be expected to freeze during a severe winter.

Answer 217

Frost Line

Question 218

One of a parallel array of light, closely spaced beams used to support a floor deck or flat roof.

Answer 218

Joist

Question 219

A beam that carries the load of a wall across a window or door opening. Also referred to as a header.

Answer 219

Lintel

Question 220

Walls that support the floor or roof of a building. They are considered structural walls and help transfer the load of a building down to the foundation and footings.

Answer 220

Load Bearing Wall

Question 221

The portion of exterior wall that projects above the level of the roof.

Answer 221

Parapet

Question 222

An interior non-load bearing wall. typically comprised of wood or metal studs with gypsum board on either side.

Answer 222

Partition

Question 223

A structural wall that is shared between two adjoining properties. Commonly built using concrete masonry units; however, many older buildings use brick

Answer 223

Party Wall

Question 224

A framing member that runs up and down the slope of a steep roof

Answer 224

Rafter

Question 225

A type of roof covering that consists of individual overlapping elements. These elements typically consist of wood, slate, asphalt, metal, plastic, or composit material

Answer 225

Shingled Roofing

Question 226

The strip of wood that lies immediately on top of a concrete or masonry fundation in a wood frame construction. Also refers to the horizontal bottom portion of a window

Answer 226

Sill

Question 227

Roofing systems that are composed of insulation, a single-ply membrane, flashing, and adhesive. the three most common types of these membranes include TPO, EPDM, and PVD

Answer 227

Single-ply Roofing

Question 228

One of an array of small, closely spaced parallel wall framing members, made of wood or metal

Answer 228

Stud

Question 229

A vertical layer of masonry that is one masonry unit thick

Answer 229

Wythe

Question 230

Wood members that are cut to pre-defined size and used in framing wooden buildings

Answer 230

Dimensional Lumber

Question 231

What should be provided beneath the basement floor slab to help prevent moisture from entering the basement?

Answer 231

Vapor Barrier

Question 232

What should be applied to the outside face of foundation walls in buildings that have basements?

Answer 232

Waterproofing

Question 233

The primary support of a stair, located on each side of the stair

Answer 233

Stringer

Question 234

A type of flooring system that utilizes pipes or tubing carrying hot water, or electric resistance heating cables

Answer 234

Radiant flooring

Question 235

Where are roof drains located?

Answer 235

The low points of the roof

Question 236

A material of low permanence that prevents moisture from entering a cold space where it can condense into a liquid

Answer 236

Vapor Retarder

Question 237

A brick veneer wall typically uses what type of drainage system?

Answer 237

Rainscreen

Question 238

What is the typical width of a foundation wall?

Answer 238

12 inches

Question 239

these are the major categories of cold-formed metal framing:

Answer 239

- U members - S members - F members

Question 240

What is used to frame around a floor opening in a cold-formed metal frame building?

Answer 240

Box beam

Question 241

If the slope of a roof is 6:12, how many inches of rise will there be for ever foot of run?

Answer 241

6 inches

Question 242

Vapor retarders can be made of these materials:

Answer 242

-Aluminum foil -Treated paper -Polyethylene film

Question 243

What are roof rafters covered by that enhances the stiffness of the roofing system?

Answer 243

Sheathing

Question 244

Made of galvanized sheet steel that is rolled or pressed into shapes that can be used for construction.

Answer 244

Cold-formed metal framing

Question 245

Sub-flooring in wood frame construction typically consists of this material.

Answer 245

Plywood

Question 246

What horizontal structural member supports a floor?

Answer 246

Joist

Question 247

What is the most common type of roof shingle?

Answer 247

Asphalt shingles

Question 248

Also referred to as a lintel

Answer 248

Header

Question 249

The overhanging lower edge of the roof rafter, over the exterior wall

Answer 249

Eave

Question 250

The widened part of a foundation that spreads a load from the building across a broader area of soil

Answer 250

Footing

Question 251

If the footing of a building is above the frost line, what will it be exposed to?

Answer 251

Expansion and contraction of the soil water

Question 252

The vertical face of a stair

Answer 252

Riser

Question 253

Non-load bearing walls that are used to form the spaces of a building. Made of cold-formed metal framing or wood framing, and finished wth gypsum board.

Answer 253

Interior partitions

Question 254

Where should handrails be mounted for stairs?

Answer 254

34"-38" above the stair treads or nosing

Question 255

Included in large spaces at the perimeter of a wood floor, along the wall, that allows for expansion and contraction.

Answer 255

Expansion joint

Question 256

The minimum slope of a tile roof

Answer 256

4:12

Question 257

Types of seams used in copper roofs

Answer 257

Standing seam and lap seam

Question 258

Metal roofing seam made by folding the adjoining edges against each other, then folding their upper portion over in the same direction.

Answer 258

Standing Seam

Question 259

Made by folding up the adjoining edges of metal roofing against each other, folding them over, and flattening the interlock.

Answer 259

Lock Seam

Question 260

Metal roof seam created when two overlapping edges of metal roof panels are joined together, secured with fasteners and sealed with a sealant.

Answer 260

Lap Seam

Question 261

Minimum slope of a metal roof

Answer 261

3:12

Question 262

Helps expel solar-heated air from the attic or roof, which reduces the cooling load for the building. Also helps prevent ice-dams from forming on the roof by maintaining a cold roof temperature

Answer 262

Roofing Ventilation

Question 263

A low protective wall that aligns with the exterior walls of a building. Often they are simply an extension of the exterior wall.

Answer 263

Parapet

Question 264

The load of the building itself, consisting of the weight of the materials used to construct the building plus and permanent fixtures. aka: gravity load

Answer 264

Dead Load

Question 265

Temporary loads imposed by people, furniture, or the weather (wind or snow)

Answer 265

Live Loads

Question 266

Type of rafter used at the diagonal intersection of planes

Answer 266

Hip rafter

Question 267

Rafters of a slope roof are fastened to this at the top of the roof.

Answer 267

Ridge Beam

Question 268

What are foundation walls typically constructed of?

Answer 268

Cast-in-place concrete

Question 269

When cold-formed metal joinsts are used in a building, what may be used for sub-flooring in place of plywood?

Answer 269

Concrete metal deck

Question 270

What may be required if a copper roof has a slope of less than 3:12?

Answer 270

Soldered seams

Question 271

Rather than being supported by rafters, what are flat roofs supported with?

Answer 271

Joists

Question 272

What does a brick veneer wall include, which helps allow water that entered the building cavity to drain back out to the exterior?

Answer 272

Weep holes

Question 273

These are all benefits of using wood construction

Answer 273

-Minimal heat loss -Renewable material -Quicker to build

Question 274

party walls are typicaly built of what material?

Answer 274

CMU

Question 275

The 4 parts of a listing contract:

Answer 275

1. Duration of the listing contract 2. Sales Price 3. Sale Commission 4. Exceptions to commission

Question 276

A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.

Answer 276

Exclusive Agency Listing

Question 277

A listing agreement employing a broker to act as agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent.

Answer 277

Exclusive Right to Sell Agreement

Question 278

An employment contract between principal and agent authorizing the agent to perform services for the principal involving the latter's property. They are entered into for the purpose of securing persons to buy, lease, or rent property.

Answer 278

Listing Agreement

Question 279

A listing which provides that the agent may retain as compensation for the agent's services all sums received over and above a net price to the owner

Answer 279

Net Listing

Question 280

An authorization given by a property owner to a real estate agent wherein said agent is given the nonexclusive right to secure a purchaser. This right may be given to any number of agents without liability to compensate any except the one who first secures a buyer who meets the terms of the listing.

Answer 280

Open Listing

Question 281

What should an agent do if the seller wishes to list their property at a different price than is suggested, despite being given an explanation and CMA?

Answer 281

List the property for sale as requested by the seller.

Question 282

An analysis of the competition in the marketplace that a property will face upon sale attempts

Answer 282

Comparative Market Analysis (CMA)

Question 283

Your client added a pool, central air, and skylights that can increase the value of a property. These would go into what category of a CMA?

Answer 283

Additions and upgrades

Question 284

This clause prevents the seller from canceling a listing agreement without the real estate agent's written agreement.

Answer 284

Termination clauses

Question 285

These types of properties should NOT be used as a comparable property in a CMA:

Answer 285

-Short sales -Foreclosure auctions -properties sold at a much higher price than the target property

Question 286

These features will require adjustments to the value of the target property when conducting a CMA:

Answer 286

-Number of bedrooms -Size of the property -Condition of the property

Question 287

A house sells and two months later, the new owners contact the sellers reporting a leaky upstairs bathroom. The seller admits to knowing about the issue and that he covered it up, and is now refusing to pay for damages since it didn't come up in the inspection. Is the seller responsible for paying for this damage?

Answer 287

Yes, since they lied about the material defect prior to the sale, the new owners have a good chance of getting the money from the seller.

Question 288

If a licensee represents both the seller and the buyer, or landlord and tenant, and also presents alternative properties to prospective buyers and tenants, are they in breach of duty to the seller or landlord?

Answer 288

No, they are are permitted to represent both parties as long as they are showing other people's properties as well. They may need to have both parties sign a waiver, should a contract be forged.

Question 289

A broker spreads rumors about the declining value of homes in the area, attempting to get owners to sell cheaply. This causes some sellers to sell their homes at lower prices not related to the intrinsic value of the real estate. What is the term used to describe this bad faith transaction?

Answer 289

Panic Selling

Question 290

An agent has four comparables in a CMA he is working on: $100,000, $300,000, $302,000, $298,000. Which one should he consider discarding before giving the CMA to his client?

Answer 290

$100,000

Question 291

A broker signs an Exclusive Right to Sell Agreement with a seller for a duration of 6 months. Two weeks later, Malia finds a buyer through another broker and tells Justin the listing agreement is null and void. Is justin owed a commission?

Answer 291

Yes, an Exclusive Right to Sell Agreement entitles him to a commission regardless of whether he finds the buyer or not.

Question 292

These are all required in a written agreement signed by a broker and principal where the consumer may pay a fee or commission to the broker:

Answer 292

-Commissions and fees -Notification that a Real Estate Recovery Fund exists and information on how to contact them -Notice to all parties of any agency relationship that exists between the broker and the buyer or seller

Question 293

These are all provisions of the Truth-in-Advertising laws pertaining to real estate:

Answer 293

-If 'sales volume' or 'production' are mentioned, list only closed transactions -Production and 'market' position claims must identify the municipality of the market -if the number of offices are listed, then only include branch offices licensed by the Commission

Question 294

A sold listing that has had the fully executed deed delivered

Answer 294

closed transaction

Question 295

These are all prohibited acts under the PA real estate law:

Answer 295

-Not providing copies of the listing, sale, lease, or other contracts to everyone who signs them -Representing more than one person in a transaction without written consent -Placing 'for sale' or 'for rent' signs or advertising any property without written consent of the owner

Question 296

A kind of agreement that means two parties agree that services will be performed, but more than one party may be contracted to perform the same services.

Answer 296

Non-exclusive agreement

Question 297

The sum of all adjustments made to a comparable property

Answer 297

Net adjustment

Question 298

An association of real estate agents providing for a pooling of listings and the sharing of commissions on a specified basis

Answer 298

Multiple Listing Service (MLS)

Question 299

Before an open house, these are the steps to take:

Answer 299

Communicate with the seller: choose dates/times, clarify goals, manage expectations Consider your target buyer: what type of person is likely to want the home? Evaluate the property: what cleaning/decluttering needs to be done? Should it be staged with furniture? when is the lighting best? Advertise the open house: mailers, social media, newspapers, reach out to agent contacts

Question 300

On the day of the open house, these are the things you should do:

Answer 300

Set-up: arrive early & double-check the house, put out sign-in sheet/guest book & business cards Talk to everyone: encourage people to leave their info, ask them about their home buying/selling plans. Have a pre-created tour of the house and info to send each person directly after the open house ends.

Question 301

An effective real estate agent website includes the following:

Answer 301

-A well written bio emphasizing what makes you stand out as an aent -A professional photo -All of your listings, including those that have sold, are in contract, closed, and available for sale -Contact information: phone number & email, and a contact form for potential clients

Question 302

Which of the following platforms has typically been the most effective way to share information regarding a property?

Answer 302

Multiple Listing Service

Question 303

The MLS requires all of this information on listings

Answer 303

-Listing price -Listing Expiration date -Property class -Property info: Address, County/State, School district, #bedrooms, #bathrooms, patio, garage, pool, etc

Question 304

This is a software that allows agents to integrate MLS listings on their website

Answer 304

IDX

Question 305

An agent who represents the buyer in a real estate transaction

Answer 305

Buyer agent

Question 306

Basic duties for a buyers agent include:

Answer 306

-Finding the appropriate property for the buyer -Negotiating an offer with the listing agent -Resolve setbacks that come up in the process -Recommend other professionals when needed

Question 307

Fiduciary duties that the seller's agent owes to the buyer as a customer include:

Answer 307

-Full disclosure of material facts -honesty -reasonable skill and care

Question 308

Any fact that may have a significant and reasonable impact on the market value of the property

Answer 308

Material Defect

Question 309

The buyer's agent owes the following duties to their client, including:

Answer 309

-Obedience -Loyalty -Disclosure -Confidentiality -Accounting -Reasonable Skill & Care

Question 310

This type of fraud is the intential failure to reveal a material fact that impacts a real estate transaction

Answer 310

Passive Fraud

Question 311

intentionally hiding a property flaw just to make a sale results in this:

Answer 311

Fraudulent misrepresentation

Question 312

These are possible consequences of making incorrect statements that could be considered fraudulent:

Answer 312

-Loss of license -Civil court penalties -Regulatory sanctions

Question 313

This type of fraud happens when a real estate licensee makes a claim that they know is false

Answer 313

Active fraud

Question 314

These are the three kinds of misrepresentations in real estate:

Answer 314

Fraudulent, negligent, innocent

Question 315

Intentional misrepresentation is also known as:

Answer 315

Active fraud

Question 316

It is difficult to prove false advertising because the consumer has to show that the statement was:

Answer 316

Deceptive

Question 317

Intentional non-disclosure is also known as:

Answer 317

Passive Fraud

Question 318

Making a statement that is not intentionally wrong, but is not correct because the agent or broker fails to confirm the accuracy prior to making the false statement

Answer 318

Negligent misrepresentation

Question 319

As an agent, your buyer will rely on your expertise in specific neighborhoods to help guide their decision. How should you best manage this relationship?

Answer 319

There should always be an honest assessment of the relative pros and cons of an area

Question 320

T/F: IF defects are found by the buyer after the preilminary inspection, but not brought to the attention of the seller, the buyer cannot sue for material defects at a later date.

Answer 320

True

Question 321

You are a broker representing buyers of real property. Prior to the sale, you collect $300 for an inspection of the property. You are legaly required to keep this money in a separate account set aside for the transaction. You cannot commingle this money with any personal or business acounts urelated to the sale. to do so would be a breach of the fiduciary duty of _____, which you owe to the buyer, your client.

Answer 321

Accounting

Question 322

T/F: The buyer's broker has no duty to inspect the property since they do not have expertise in the fields needed to do so.

Answer 322

True

Question 323

This party can be held financially responsible for material defects if they do not make them known before a closing.

Answer 323

Seller

Question 324

A marketing tactic where a salesperson or marketing material exaggerates a property's features or benefits to attract buyers. The tactic is legal because it is considered more of an opinion than a factual misrepresentation

Answer 324

Puffing

Question 325

A written agreement or contract between seller and purchaser in which they reach a "meeting of the minds" on the terms and conditions of the sale.

Answer 325

Agreement of Sale

Question 326

A response to an offer to enter into a contract, changing some of the terms of the original offer. It is a rejection of the original offer and does not create a binding contract unless accepted by the party who made the original offer.

Answer 326

Counter Offer

Question 327

Generally, an agreement to agree. It outlines the terms between parties who have not formalized an agreement into a contract. They are not binding and cannot be enforced.

Answer 327

Letter of Intent (LOI)

Question 328

Elements required for the formation of a legally binding contract involving the invitation to act on certain terms by one person to another person and an indication by that person to adopt those terms.

Answer 328

Offer and Acceptance

Question 329

A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforced at law, e.g., contrat for the sale of real property

Answer 329

Statute of Frauds

Question 330

the illegal mixing of personal funds with money held in trust on behalf of a client.

Answer 330

Commingling

Question 331

The misappropriation of another's property, such as if an agent keeps money meant for holding in escrow

Answer 331

Conversion

Question 332

Additional pages of material that are added to and become part of a contract.

Answer 332

Addendum

Question 333

An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or recission.

Answer 333

Specific Performance.

Question 334

The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.

Answer 334

Novation

Question 335

A sum agreed upon by the parties to be full damages if a certain event occurs.

Answer 335

Liquidated Damages

Question 336

A seller sells real estate to a buyer. According to the real estate contract, the seller was required to pay off all liens prior to closing, but has not done so. The closing is completed, the buyer has the deed, and the seller has the money. Has there been full performance?

Answer 336

No, this is partial performance.

Question 337

A contract to make another contract

Answer 337

Collateral contract

Question 338

Under what circumstances could a buyer be entitled to compensatory damages?

Answer 338

If there is damage to the property that is discovered after the closing.

Question 339

Jess is interested in buying Sam's real estate. They enter into a contract. The contract allows Jess to inspect the property. While inspecting the property, Jess damages a water pipe and causes $10,000 damage to the house. What type of damages can Sam claim?

Answer 339

Compensatory damages

Question 340

What is an amendment?

Answer 340

A document that changes the term of a contract

Question 341

When a buyer is unable to obtain a mortgage as stated in the contract and the contact is canceled, it is an example of what?

Answer 341

Termination by contingency.

Question 342

Stan is selling his real estate to Brian pursuant to a real estate contract. Brian's attorney examines the title and finds that there is an easement on the property that will not allow it to be sold and used for the purpose that Brian needs. The contract allows Brian to back out if there is a significant title problem. What remedy is available to the seller?

Answer 342

None. The contact will be canceled for impossibility and contingency

Question 343

What are the two types of damages generally available for breach of contract?

Answer 343

Compensatory damages and liquidated damages

Question 344

What is the result when a contract is terminated?

Answer 344

The contract is void and has no legal affect.

Question 345

What penalties could a licensee face for unauthorized practice of law?

Answer 345

Suspension or loss of their license

Question 346

What are the public policy grounds for making specific performance a rare remedy?

Answer 346

Courts do not want to force people into transactions that they do not want to join into & will opt for a monetary remedy where available

Question 347

When the contract cannot be performed because of an event beyond the control of the parties.

Answer 347

Impossibility of performance

Question 348

What is required to obtain liquidated damages?

Answer 348

A liquidated damages clause in the contract.

Question 349

If the buyer on a real estate contract refuses to close for no valid reason allowed by the contract, what remedy is available to the seller?

Answer 349

The seller gets to keep the earnest money as damages

Question 350

What prevents the buyer from backing out of a real estate contract?

Answer 350

Earnest money

Question 351

Jim is a seller on a real estate contract, and Bill is the buyer. Jim receives the purchase price from Bill, and Jim hands Bill a deed for the real estate, but Jim did not sign it. What remedy is available to Bill?

Answer 351

Specific performance to sign the deed. The parties clearly wanted the transaction to go forward.

Question 352

What is contained in a letter of intent?

Answer 352

The basic terms of the real estate contract.

Question 353

What is usually the result of a situation of impossibility of performance of a contract?

Answer 353

Both parties go their separate ways in the condition before the contract was signed.

Question 354

When do damages usually occur in a real estate closing?

Answer 354

When the real estate contract is breached.

Question 355

What is the name of the process when a contract is canceled by both parties?

Answer 355

Termination by mutual agreement

Question 356

Real estate is being sold, and the parties agree that some of the personal property will remain with the home, but some of it will not. What is the best way to handle this situation?

Answer 356

An addendum lising the personal property.

Question 357

Brian and Seth ask licensee Larry to help them draft their real estate contract. Seth asks Larry about what would happen if he cancels the contract before the closing, and Larry tells him that he could get sued or may have to pay money. Was this a legal exercise of the licensee's job?

Answer 357

No, it is unauthorized practic of law to give legal advice.

Question 358

If the seller in a real estate contract fails to appear for the closing, and has not taken any of the purchase price, what remedy is available to the buyer?

Answer 358

Receiving a refund of the earnest money

Question 359

What can be enforced due to partial performance of a contract?

Answer 359

Specific performance or termination of the contract

Question 360

How would a corporation sign a real estate contract?

Answer 360

Through an agent appointed by the corporation, usually a corporate officer

Question 361

In theory, can a real estate contract be written on a napkin?

Answer 361

Yes, if all the required terms are there.

Question 362

What could happen to a party that does not follow a court order for specific performance?

Answer 362

Sanctions from the court or imprisonment.

Question 363

Gary is selling his real estate. There are numerous liens on the property because Gary is really bad about paying his debts. Deb wants to buy the property and demands that Gary pay off the liens before title passes. What is this called?

Answer 363

Condition precedent

Question 364

Jim and Evan enter into a real estate contract. The contract allows evan to get a mortgage at 5% interest. But after due diligence, Evan can only get a mortgage at 8% interest. What will happen to the real estate contract?

Answer 364

Termination by contingency

Question 365

If the escrow agent cannot determine who gets the earnest money, what can he do?

Answer 365

File an interpleader case in court and let a judge decide.

Question 366

When can extrinsic evidence be used in court?

Answer 366

If there is an ambiguity within the contract itself.

Question 367

Bret is the buyer on a real estate contract. He's obligated to pay $100,000 to buy a new home. However, for other reasons, Bret goes into bankruptcy. What will likely happen to the contract?

Answer 367

The trustee will terminate the contract by operation of law

Question 368

How can the insurance contingency cause a contract to be canceled?

Answer 368

If the buyer cannot obtain title insurance because of a defect in the title.

Question 369

If a bankruptcy is discharged, what happens to payment obligations under a contract?

Answer 369

Payment obligations are canceled

Question 370

When part of an expense related to the property is divided by the buyer and seller based on the closing date.

Answer 370

Proration

Question 371

The interest earned by an investor on an investment (or by a bank on money it has loaned)

Answer 371

Yield (aka return)

Question 372

What does PITI stand for?

Answer 372

-Principal -Interest -Taxes -Insurance

Question 373

A person whose principal business is the originating, financing, closing, selling, and servicing of loans secured by real property for institutional lenders on a contractual basis.

Answer 373

Mortgage Banker

Question 374

A broker who arranges a mortgage loan between a lender and a borrower for a fee.

Answer 374

Mortgage Broker

Question 375

A mortgage securing a loan made by investors without governmental underwriting, which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.

Answer 375

Conventional Loan

Question 376

The percentage of a property's value that a lender can or may loan to a borrower

Answer 376

Loan to Value Ratio (LTV)

Question 377

Mortgage guarantee insurance available to conventional lenders on the first, high risk portion of a loan.

Answer 377

Private Mortgage Insurance (PMI)

Question 378

A fully amortizing loan in which the interest rate on the note remains the same throughout the term of the loan.

Answer 378

Fixed-rate mortgage

Question 379

A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.

Answer 379

Interest-only mortgage

Question 380

A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.

Answer 380

Adjustable Rate Mortgage (ARM)

Question 381

A mortgage loan in which payments are insured byt the Federal Housing Administration

Answer 381

FHA-insured loan

Question 382

The amount paid by a mortgagor for mortgage insurance on an FHA-insured loan.

Answer 382

Mortgage Insurance Premium (MIP)

Question 383

A loan made to qualified veterans for the purchase of real property wherein the Department of Veterans Affairs guarantees the lender payment of the mortgage.

Answer 383

VA guaranteed loan

Question 384

A type of loan used to fund the purchase of more than one piece of real property. Often used for subdivision financing.

Answer 384

Blanket Mortgage

Question 385

Obtaining a lower interest rate by paying additional points to the lender

Answer 385

Buydown

Question 386

A loan secured for real estate, which is for the purpose of funding the construction or improvements of buildings upon the property.

Answer 386

Construction Loan

Question 387

A method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items such as a washer and dryer, refrigerators, stove, and other specified appliances.

Answer 387

Package Mortgage

Question 388

A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the exisiting one in addition to any superior mortgages already secured by the property.

Answer 388

Wrap-around Mortgage

Question 389

A step above pre-qualification, an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from a lender, or the maximum amount that the lender would be willing to lend.

Answer 389

Pre-Approval

Question 390

A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them

Answer 390

Pre-qualification

Question 391

An individual at a lending institution who determines credit worthiness in order to qualify an applicant for a loan

Answer 391

Underwriter

Question 392

The criteria with which a lender determines the credit worthiness in order to qualify them for the loan

Answer 392

underwriting

Question 393

What is in the loan commitment letter?

Answer 393

It identifies the borrower, conditions of the loan, interest rates, and financial terms.

Question 394

Who establishes the criteria for owner financing?

Answer 394

The buyer and seller work out terms

Question 395

If Jeff wants to obtain a VA loan, where does he apply for it?

Answer 395

After getting a Certificate of Eligibility from the VA, he can work through any VA approved lender.

Question 396

Can wraparound loans help your buyer purchase a home?

Answer 396

Yes, but this is a type of owner financing that the lender must approve.

Question 397

Matt has a pre-qualification letter from a lender. Has he been approved?

Answer 397

Not, it means he's supplied information, but that information is not yet verified. He must have a pre-approval letter once the lender evaluates the info.

Question 398

What is a mortgage banker?

Answer 398

A middleman that packages and sells loans to third parties, but also manages payments

Question 399

What is the biggest difference in credit unions and typical banks?

Answer 399

Credit unions are member-owned, and not profit-driven organizations

Question 400

If you receive an offer from a mortgage broker, will your loan come from that broker?

Answer 400

Not necessarily, mortgage brokers work with numerous lenders and the mortgage could come from multiple sources.

Question 401

What is the collateral in a blanket mortgage?

Answer 401

Whatever asset the buyer uses to obtain the loan, such as another home's equity

Question 402

Why is the Uniform Loan Application important?

Answer 402

It provides information that backers of loans, such a Fannie Mae and Freddie Mac require.

Question 403

What is the most commonly used mortgage application?

Answer 403

THe 1003 mortgage application aka Uniform Loan Application

Question 404

Jack is ready to buy a home and can make a 10% downpayment. Can he qualify for a conventional loan?

Answer 404

Most often, conventional loans require 20% down

Question 405

If Bob just got a job, could he qualify for a home loan?

Answer 405

In some cases, if he has a down payment and a good credit score.

Question 406

When the seller is willing to accept payments from the buyer over time to purchase the home.

Answer 406

The seller purchased a Money Mortgage

Question 407

Your home buyer has a credit score of about 600. What type of loan should they apply for?

Answer 407

FHA loans only require credit scores of at least 500

Question 408

How can you explain to Dave why his lender is charging him more for a home loan than his friend?

Answer 408

Like with stock market, lenders assign risk to each investment. high risks have to yield a high return. Higher interest rates are charged to high-risk borrowers.

Question 409

If Jessica wants a stable monthly payment, what should she look for in a loan?

Answer 409

A fixed interest rate loan

Question 410

Can private mortgage insurance be canceled later?

Answer 410

Yes, after the borrower proves he will maintain his loan payments and accumulates equity in the home.

Question 411

Are commercial banks a good bet for your buyer who wants to sit down and talk to an agent?

Answer 411

No, they could be located nationwide and typically don't have actual branches.

Question 412

Should high-risk borrowers work with a mortgage broker?

Answer 412

Yes, they have accesss to numerous lenders including high-risk lenders.

Question 413

If Nora fails to make a payment on her loan but has private mortgage insurance, will that stop foreclosure?

Answer 413

No. PMI pays a fee to the lender, but it does not stop foreclosure nor compensate for the entire amount lost.

Question 414

What impact does a high-valued home have on the cost of a loan?

Answer 414

A higher valued home is more risk, increasing the potential interest rate and costs.

Question 415

If your buyer has pre-approval for a VA loan, can he buy a home in need of significant repairs?

Answer 415

Potentially, but VA loans require a home inspection and must meet safety standards

Question 416

What makes credit unions less expensive?

Answer 416

Credit unions don't have middlemen, which can reduce costs

Question 417

If a home buyer wants an FHA loan, can he get it through a savings and loan association?

Answer 417

Most offer them, but not all favor these loans.

Question 418

How can your client obtain a loan to build a home?

Answer 418

They can obtain a construction loan through a traditional mortgage lender

Question 419

Are conventional loans risky to lenders?

Answer 419

Yes, they carry more risk than federally backed programs

Question 420

With a low down-payment, is a savings and loan association best for a borrower?

Answer 420

It may be one option, but these loans tend to offer only 95% percent of the home loan as financing.

Question 421

Steve wants to buy a home that's in pretty bad need of repairs. Are conventional loans a good option?

Answer 421

They can be because other loans have high restrictions imposed by the backers, however interest rates may be higher

Question 422

Will a borrower need to pay closing costs on their VA loan?

Answer 422

Maybe, but these are often paid by the seller and are typically lower.

Question 423

The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to ensure that prospective borrowers and purchasers of credit receive credit cost information before entering into a transaction

Answer 423

Truth-in-Lending Act (TILA)

Question 424

An illegal lending policy of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks withot due consideration being given to the credit worthiness of the individual loan applicant.

Answer 424

Redlining

Question 425

A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development

Answer 425

Real Estate Settlement Procedures Act (RESPA)

Question 426

Under RESPA, how many days does the borrower have to review the closing disclosure?

Answer 426

3 business days

Question 427

For first-tier violations under TILA, lenders can pay up to how much in fines?

Answer 427

$5,000

Question 428

These are all examples of adverse credit actions

Answer 428

-denying a credit increase request -closing an existing account -denial of credit to an applicant -approving a credit application in a lesser amount than what was requested

Question 429

If a commercial applicant generates more than $1 million in revenue, and asks about an adverse credit decision, the lender must provide a response within how many days?

Answer 429

60. The ECOA gives the lender 60 days to respond due to the given circumstances

Question 430

In what year was RESPA enacted?

Answer 430

1975

Question 431

The ECOA applies to what forms of credit?

Answer 431

-Car loans -Credit Cards -Home Loans -Small Business Loans -Student Loans

Question 432

When a lender applies a neutral policy that results in certain groups being unfairly burdened or excluded, this is referred to as what?

Answer 432

Disparate Impact

Question 433

How many different types of loans are covered by TILA?

Answer 433

5. TILA applies to most types of consumer credit, including closed-end credit (car loans and home mortgages), and open-end credit (credit cards & home equity lines of credit)

Question 434

When a lender takes action to force an appraisal to come in low

Answer 434

Lowballing

Question 435

The government has up to how many years to bring a claim for a RESPA violation?

Answer 435

3 years

Question 436

For how many months must a lender keep the applicants records on file?

Answer 436

25 months

Question 437

Under RESPA, after the initial escrow report, how often must lender provide borrowers with updated reports?

Answer 437

Annually

Question 438

If a person feels a violation of Section 8 of RESPA has occurred, how much time do they have to make a claim?

Answer 438

1 year

Question 439

A right set forth by TILA of a borrower to cancel a home equity loan or line of credit with a new lender, or to cancel a refinance transaction done with another lender than the current mortgage, within 3 days of closing

Answer 439

Right of Rescission

Question 440

Lenders may ask about alimony payments, however...

Answer 440

The borrower is not required to answer, and the lender must give them notice of this option

Question 441

The Equal Credit Opportunity Act (ECOA) became law in what year?

Answer 441

1974

Question 442

After a borrower submits a loan application, the lender has three days to provide which document to the borrower?

Answer 442

Loan Estimate

Question 443

These are the main four parts of the ECOA

Answer 443

-Definition of discrimination -Applicant rights -Reasoning for the credit decision made of the borrower -Record Keeping

Question 444

If a person walks into a bank and is told they can't apply for a mortgage because they are black, this would be an example of what type of discrimination?

Answer 444

Overt Evidence of Disparate Treatment

Question 445

Creditors who violate the ECOA can be held liable in an individual lawsuit for up to how much?

Answer 445

$10,000

Question 446

The organization in charge of enforcing TILA

Answer 446

Consumer Financial Protection Bureau

Question 447

Section 10 of RESPA covers what part of the loan process?

Answer 447

Lender Escrow Requirement

Question 448

If a person feels that a lender has discriminated against them in the loan process, they can file a claim with what organization?

Answer 448

Department of Housing and Urban Development

Question 449

If a title company offers you money in exchange for bringing your business there, they are in violation of which section of RESPA?

Answer 449

section 8

Question 450

If a commercial applicant generates less than $1 million in revenue, and asks about an adverse credit decision, the lender must provide a response within how many days?

Answer 450

30 days.

Question 451

When an applicant's approval criteria is "on the line"/middle of the road and the lender has more discretion as to whether or not to issue an approval, they approve for certain types of people and deny for others based on discriminatory reasons

Answer 451

Comparative Evidence of Disparate Treatment

Question 452

An estimate of the value of property resulting from an analysis of facts about the property. An opinion of value.

Answer 452

Appraisal

Question 453

One qualified by education, training, and experience who is hired to estimate the value of real and personal property based on experience, judgement, facts, and use of formal appraisal process

Answer 453

Appraiser

Question 454

Three reasons an appraisal may be used:

Answer 454

-Transfer of Property -Financial Reasons (refinancing or 2nd mortgage) -Tax Purposes

Question 455

Factors that go into determining value in an appraisal:

Answer 455

-Scarcity -Transferability -Utility -Demand

Question 456

Different types of Property Value:

Answer 456

-Investment Value -Insured Value -Value-in-use -Assessed Value -Mortgage Value

Question 457

A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property

Answer 457

Assessed Value

Question 458

The value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting cost of non-insurable items (eg land value) from market value

Answer 458

Insured Value

Question 459

The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale, i.e. the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.

Answer 459

Market Value

Question 460

The total dollar expenditure for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor's overhead and profit, and entrepreneurial overhead and profit (may or may not equal value)

Answer 460

Cost

Question 461

The specific value of an investment to a particular investor or class of investors based on individual investment requirements; distinguished from market value, which is impersonal and detached

Answer 461

Investment value

Question 462

The ability to transfer ownership of property from one person to another

Answer 462

Transferability

Question 463

The ability to give satisfaction and/or excite desire for possession. The more useful a property, the higher the value.

Answer 463

Utility

Question 464

Present worth of future benefits arising out of ownership to typical users/investors

Answer 464

Value

Question 465

When value is tied to the benefits the property may offer buyers in the future

Answer 465

Principle of Anticipation

Question 466

When the fluctuation of supply and demand, interest rates, and property conditions have an impact on the value of property

Answer 466

Principle of Change

Question 467

When supply vs demand, or available houses vs number of buyers affects the values of property

Answer 467

Principle of Competition

Question 468

When the uniqueness of a home, based on other homes in the area, drives the value down on a property

Answer 468

Principle of Conformity

Question 469

When the features of a home impacts the value of the property based on what buyers for that type of property are looking for.

Answer 469

Principle of Contribution

Question 470

When a property at the time of appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of profit. This is the starting point for an appraisal

Answer 470

Highest and Best Use

Question 471

When the ability to acquire another property that is both desirable and similar in a short period of time

Answer 471

Principle of Substitution

Question 472

When the value of the surrounding properties decreases, thus decreasing the value of the properties nearby.

Answer 472

Principle of Regression

Question 473

When the value of the surrounding properties increases, thus increasing the value of the properties nearby.

Answer 473

Principle of Progression

Question 474

A valuation method which compares a subject property's characteristics with those of comparable properties which have recently sold in similar transactions

Answer 474

Sales Comparison Approach

Question 475

Three steps to the Sales Comparison:

Answer 475

1. Property Identification 2. Compare the Properties 3. Final Valuation

Question 476

Steps to the Cost Approach of appraisal (and the formula to calculate it):

Answer 476

1. Valuation of Land 2. Cost of Development 3. Depreciation 4. The Math Matters Value = Replacement cost - depreciation + value of land

Question 477

An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting the estimated accrued depreciation, then adding the market value of the land

Answer 477

Cost Approach

Question 478

Valuation of the property by using net operating income and dividing it by the capitalization rate

Answer 478

Income Capitalization Approach

Question 479

The final stage in the appraisal process where the appraiser reviews the data and estimates the subject property's value

Answer 479

Reconciliation

Question 480

This figure is calculated using the rental amounts the property is generating and subtracting the normal expenses of the property, not including mortgage payment

Answer 480

Net Operating Income

Question 481

This rate is determined by the return the investor is anticipated to get on the property.

Answer 481

Capitalization Rate

Question 482

Appraisal steps for the Income Capitalization Approach:

Answer 482

1. Determine Market Rent 2. Vacancy and missed payments 3. Total operating expenses 4. Capitalization Rate 5. Determining Value

Question 483

The use of borrowed capital (mortgage) to increase the potential return of an investment.

Answer 483

Leverage

Question 484

The idea that money available at the preent time is worth more than the same amount in the future due to its potential earning capacity.

Answer 484

Time Value of Money

Question 485

When the cap rate of an investment is higher than the interest rate on the mortgage, what will an investor have?

Answer 485

positive leverage

Question 486

When the cap rate is less than the interest rate of the mortgage, it creates:

Answer 486

Negative Leverage

Question 487

The income a property produces before debt service and any capital expenditures.

Answer 487

Net Operating Income (NOI)

Question 488

The rate of return on a real estate investment based on the NOI of a property

Answer 488

Capitalization rates (CAP rates)

Question 489

The formula for calculating CAP rates:

Answer 489

CAP rate = NOI/ Purchase price (or current market value)

Question 490

Cash on Cash Return. The annualized return an investor will earn on ther initial cash investment

Answer 490

Return on Investment

Question 491

IF an investor were to purchase a property using all cash, the return on investment would equal:

Answer 491

The capitalization rate for year one

Question 492

Income earned from laundry facilities at a rental property will be included under which of the following line items?

Answer 492

Other Income

Question 493

IN what cases is the cost approach to appraisal used?

Answer 493

-FNMA Manufactured Housing Loans -Special use buildings -Property in the process of bieng built or rebuilt

Question 494

What is the purchase price of a property if an investor were to earn a 10% cash-on-cash return on $350,000 in cash flow after year one?

Answer 494

350,000 * 10 = 3,500,000

Question 495

Which valuation method is commonly used to value residential properties?

Answer 495

Sales Comparison Approach

Question 496

IF three homes used for comparison all have different square footae, what does the appraiser do?

Answer 496

get the average square feet and cost per square foot for the new property

Question 497

An investor is looking to purchase a property for $3,000,000. if the investor is purchasing at a 5% cap rate, what is the NOI of the property?

Answer 497

3,000,000 * 0.05 = 150,000

Question 498

An investor's downpayment on a property is equal to their initial _____ in the property

Answer 498

Equity

Question 499

What goes into a land valuation?

Answer 499

-Shape -Size -Location -Frontage

Question 500

This may be used to reduce the taxable income on a property:

Answer 500

Write-off of interest paid on the mortgage

Question 501

If a property has an effective gross income of $1,250,000 and expenses totalling $680,000, what is the net operating income?

Answer 501

1,250,000 - 680,000 = 570,000

Question 502

What is the effective gross income of a property that has an NOI of $400,000 and expenses totaling $520,000?

Answer 502

400,000 + 520,000 = 920,000

Question 503

When a unit is not being rented, what should it be classified as?

Answer 503

vacancy

Question 504

An investor purchased a property for $2,600,000 using all cash. What is the NOI on the property after year one if the investor earned a 10% cash-on-cash return?

Answer 504

2,600,000 * 0.10 = 260,000

Question 505

How often is the square foot method of valuation used?

Answer 505

Seldom because it is the least accurate

Question 506

If an investor purchased a property for $2,000,000 using all cash, what would be their return on investment in year one if the property yielded $260,000 in cash flow?

Answer 506

260,000 / 2,000,000 = 0.13 or 13%

Question 507

What does unit-in-place value take into consideration?

Answer 507

direct and indirect costs for a specific piece of construction

Question 508

An office building would be valued using what method?

Answer 508

Income capitalization approach (income method)

Question 509

The NOI plus the total expenses of a property equals:

Answer 509

Effective gross income

Question 510

Is data from recent sales enough to establish value?

Answer 510

No, combining recent sales only gives you an estimate

Question 511

What is the value of a property with an NOI of $320,000 and a going cap rate of 5%?

Answer 511

320,000 / 0.05 = 6,400,000

Question 512

These items are expenses found on a pro-forma

Answer 512

-Property taxes -Management fees -Marketing expenses

Question 513

Is it necessary to have a lease agreement to determine the occupancy of a commercial property?

Answer 513

No, appraisers can determine whether a property will remain occupied based on average occupancy of similar properties.

Question 514

What value is used for establising taxes?

Answer 514

Assessed Value

Question 515

Does it matter if a sale was forced becaue of foreclosure or divorce?

Answer 515

Yes, this is considered a "fire sale" and may not be a true reflection of value

Question 516

What is an arm's length sale?

Answer 516

When the buyer & seller are unrelated

Question 517

What value is most commonly used for commercial property?

Answer 517

Value in use

Question 518

Can all property be valued using the sales comparison approach?

Answer 518

Typically, this approach is used for residential property

Question 519

If the home for sale has more bathrooms or additional bedrooms than the homes sold, what does the appraiser do?

Answer 519

Add the value of extra rooms to the value of the home

Question 520

Formula for cost approach:

Answer 520

Value = Replacement cost - Depreciation + Value of land

Question 521

The top line in the income section of a pro-forma lists:

Answer 521

Potential gross income

Question 522

What defines how much risk a property presents?

Answer 522

Capitalization rates: the higher the rate, the more risk

Question 523

The cost approach is primarily use to value what type of buildings?

Answer 523

Special purpose buildings, like schools, hotels, hospitals, etc

Question 524

What is a cost approach appraisal?

Answer 524

The cost of buying a property. Defined as an analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

Question 525

Formula to determine how much is paid in interest each year:

Answer 525

Yearly Interest Payment = Loan Amount * Interest Rate

Question 526

Information needed to determine the monthly payment on a fully amortizing loan

Answer 526

-loan amount -term of the loan -interest rate -factor derived from mortgage payment table

Question 527

Steps to using the factor number to determine monthly payments on a loan

Answer 527

1. get the factor from the mortgage payment table 2. divide the loan amount by $1,000 3. multiply the factor number

Question 528

Formula for determining monthly payments (on loan only):

Answer 528

(Loan amount / 1000) * factor# = Monthly principal + interest

Question 529

Formula for calculating Transfer Tax:

Answer 529

(Purchase Price / 100) * 0.10 = transfer tax

Question 530

Formula for calculating Intangible Tax

Answer 530

(Mortgage / 500) * 1.50

Question 531

Formula for calculating Origination Fee:

Answer 531

Origination fee = 1% of loan amount = Loan * 0.01

Question 532

Formula for Loan to Value Ratio:

Answer 532

Loan amount / Value of home

Question 533

According to the capital gains tax law, a single person may exclude up to $250,000 in capital gains from taxation on the sale of a home if they have lived in the house for at least:

Answer 533

two of the past five years