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Principles of real estate II > Principles of real estate II > Flashcards

Principles of real estate II Flashcards

1
Q

What institution did congress create after the bank failures in the 1920s and 1930s to insure customer deposits, supervise financial institutions for safety and soundness, make large financial institutions resolvable, and manage receiverships?

A

FDIC (Federal deposit insurance corporation)

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2
Q

Ava is worried, as she is having difficulty securing her credit report while trying to complete her pre-qualification obligations for a loan. Analyze Ava’s situation.

A

Ava should not worry. For pre-qualification, she will self-report on her income, assets, debts, but her credit report won’t be pulled until pre-approval.

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3
Q

What are property taxes based on?

A

The tax rate and the assessed value of the property

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4
Q

The income a property generates after taking into account other factors such as vacancy losses and additional revenue from sources other than rent is known as:

A

Effective gross income

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5
Q

Alicia has two people interested in the property she is selling. She gives them both a copy of the property report. She is required to do s under what act?

A

The interstate land sales full disclosure act

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6
Q

What is the principle of substitution?

A

The principle states that the value of something is affected by the cost of getting a similar (substitute) item elsewhere.

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7
Q

Michelle is purchasing a condo uptown. She received a loan of $145,000 for the condo, which covers 67% of the purchase price. What is the amount of the down payment Michelle will be making?

A

$71,418

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8
Q

Which of these is a point of differentiation between Ginnie Mae and Fannie Mae, Freddie Mac, and Farmer Mac?

A

Ginnie Mae is NOT a private government- sponsored enterprise whereas Freddie Mac, farmer Mac, and Fannie mae are.

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9
Q

Marvin took out a loan of $15,000 to remodel his house at a 5% interest rate. If no principal had been repaid, how much would he owe in interest after a year?

A

$750

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10
Q

With amortized loans, the borrower is:

A

Paying interest and principal with each payment until the loan is paid off

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11
Q

Micah is an appraiser in Austin. Which entity is he regulated by?

A

TALCB (TEXAS APPRAISER LICENSING AND CERTIFICATION BOARD)

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12
Q

Angie is selling her home. She has $165,000 left on her mortgage, $15,000 in closing costs, and a 4% sale commission to pay her agent. What’s the least Angie should sell for if she wants to earn at least $75,000 on the sale?

A

$265,625

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13
Q

A granting clause:

A

States the property is being conveyed from the grantor to the grantee

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14
Q

Which of these scenarios would be most likely to result in the granting of a conditional- use permit?

A

Amy wants to build a bed & breakfast in an area zoned for residential use

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15
Q

Using the cost approach formula, find this property’s value” the subject property is 20 years old and has 30 years of remaining economic life. The cost of reproduction of the subject property is $375,000. The subject property’s land value is $140,625

A

$365,625

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16
Q

What is economic obsolescence?

A

The Loss of property value caused by negative forces beyond the control of the owner

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17
Q

What act requires that applicable contracts have a 7-day “cooling off” period for buyers, during which buyers can cancel their contract for any reason and get their money back?

A

Interstate land sales full disclosure act

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18
Q

What is the principle of regression?

A

States that a subject property situated in the midst of lower-value homes will experience a downward pull on its own value

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19
Q

What is a gross lease?

A

The tenant has one, flat monthly rent payment and landlord covers all other expenses including property taxes

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20
Q

How do subprime mortgage interest rates relate or compare to prime mortgage interest rates?

A

Subprime mortgages carry higher interest rates than prime mortgages.

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21
Q

What legislation mandates a nationwide licensing and registration system for residential mortgage loan originators (MLOs)?

A

SAFE Act (secure and fair enforcement for mortgage licensing act)

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22
Q

Cheryl needs to hire an auctioneer to sell one of her properties. Arthur is licensed as an auctioneer, but he does NOT hold a real estate license. Is it legal for Cheryl to hire Arthur to help sell her properties without a real estate license?

A

It is legal as long as Arthur does not perform any other act of a broker or license holder

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23
Q

John is moving into a privately owned apartment complex and asks the landlord to accommodate his wheelchair. John says he needs concrete ramps to be installed around the property. The landlord says he can’t afford to install ramps but is worried that he is discriminating. What is TRUE?

A

The landlord doesn’t legally have to install ramps because they are cost-prohibitive, but John can install them at his own expense.

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24
Q

Which party is most likely to put deed restrictions in place?

A

Property developer

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25
Q

What is a title that is free from any serious defect and legal exposure?

A

Marketable title

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26
Q

What is a variance?

A

Allows a specific property to deviate from a specific provision of a zoning ordinance.

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27
Q

What is the whole purpose of a title search?

A

To ensure the seller has a marketable title to convey

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28
Q

What is the difference between publicly traded REITs and non-traded REITs?

A

Publicly traded REITs are publicly traded on the stock exchange. Non-traded REITs are NOT publicly traded.

29
Q

What entity consists of 11 district banks that are regulated by the federal housing finance agency?

A

FHLB (FEDERAL HOME LOAN BANK system)

30
Q

Elmer wants to install lowered light switches in his apartment so that he can reach them from his wheelchair. the landlord agrees but says that Elmer must install them at his own expense. Elmer argues that the landlord must pay for them. Who is correct?

A

The landlord. Elmer must pay for the modifications.

31
Q

Tyrell, an appraiser with 25 months of experience, is authorized to participate in one-to-four residential unit transactions, no matter the value of those transactions. based on this info, what level of appraisal does he have?

A

Certified residential appraiser (he has less than 2 and 1/2 years of experience, so can’t be certified general appraiser)

32
Q

The replacement cost to build a house is approx. $350,000. Similar lots sell for $100,000. The property’s physical deterioration equals about $60,000. Based on the cost approach, what would be the value of this property?

A

$390,000

33
Q

In a real estate transaction, the lender usually selects which party?

A

The appraiser

34
Q

What is functional obsolescence?

A

loss of value due to a property’s features or appearance going out of style or being replaced by a more appealing, effective version

35
Q

What is a primary advantage of REMIC?

A

they offer stability with the variety of mortgages they contain

36
Q

The interstate land sales full disclosure act is applicable to developers involved in the interstate sale or leasing of:

A

100 or more lots

37
Q

What serves to protect lenders from unknown existing defects on a title?

A

Lenders title policy

38
Q

How is market value decided for a property?

A

It is based on collected data taken about the property

39
Q

A property is sold for $100,000. The buyer has paid $12,000 as earnest money and is obtaining a 70% loan. based on the info provided, how much additional cas h will the buyer have to bring to closing? Q

A

$18,000

40
Q

Who does private mortgage insurance protect?

A

The lender against the buyer default

41
Q

What is a quitclaim deed?

A

A type of special warranty deed that is commonly used for adding or removing a spouse from title due to marriage or divorce.

42
Q

Rex purchased an investment property with the intention of renting it out. To finance it, he set up a partially amortized loan with a balloon payment. What risk could this pose for him as the borrower?

A

If his property fails to gain value through renter revenue, Rex could be caught with insufficient funds at the time of the larger balloon payment

43
Q

What is the goal of TRID?

A

To help borrowers select the best mortgage for them through an integration of TILA and RESPA

44
Q

What is covered by regulation Z?

A

A mortgage secured by a residence

45
Q

What are Tranches?

A

Mortgage-backed securities that are sold to investors at different risk levels and classes

46
Q

What is CERCLA?

A

Comprehensive environmental response, compensation and liability act - identifies responsible parties and order them to cleanup hazard waste

47
Q

What has been the impact of the FHA’s practice of insuring approved lenders of FHA loans against losses?

A

It expanded the pool of potential homebuyers that lenders were willing to underwrite loans for

48
Q

What is not an economic principle of value?

A

Principle of best use

49
Q

What is non-conforming use?

A

If the now out of compliance structure is allowed to continue

50
Q

What is the principal of Conformity?

A

Says values are highest when the houses In a niehgborhood look roughly the same

51
Q

What is the formula for value of a rental property?

A

Net operating income divided by capitalization rate = value

52
Q

What is the principal of contribution?

A

Property’s overall value is made up of the combined value of each of its parts

53
Q

What is the CFPB’S role when it comes to properties subject to the interstate land sales full disclosure act?

A

To require the developer to register information about the development in a property report

54
Q

What government agency allows single -family properties to be depreciated over the course of 27.5 years?

A

Internal revenue service

55
Q

What is an easement by prescription?

A

An implied easement allowing the use of an estate after a dominant estate has used the property for a statutorily prescribed number of years

56
Q

What is the last phase of a real estate syndication?

A

Liquidation (organization, then operation, then liquidation)

57
Q

As the term relates to the appraisal process, what is reconciliation?

A

When a property is appraised according to date gathered from more than one approach to value

58
Q

What term describes a property that is owned by a lender because a third-party buyer couldn’t be found at a foreclosure auction?

A

REO (real estate owned)

59
Q

What is a habendum clause?

A

It defines or limits the ownership interest of the grantee

60
Q

Alexis owns a fried chicken restaurant, tender times. When her area is reasoned from commerical to residential, Alexis is allowed to continue operating tender times in the same location. What is this an example of?

A

Nonconforming use

61
Q

What is the legal process by which a court determines the validity of a will and establishes the assets of a decedent and who will inherit those assets?

A

Probate

62
Q

What is a special purpose vehicle? (SPV)

A

A limited corporate entity created with a specific objective

63
Q

What is generally seen as the primary incentive for choosing a commercial real estate investment?

A

The tax benefits

64
Q

What methods can be used when determining value through the cost approach?

A

The square foot method, the unit in place method, and the quantity survey method

65
Q

Which of the following is an example of something that would be listed on a closing disclosure as a credit to the buyer?

A

The balance of the buyers new loan

66
Q

What does package mortgage include?

A

Not only real estate, but personal property and appliances installed on premises

67
Q

A deed restriction in a neighborhood requires a 15 ft setback. The city zoning regulations specify a minimum of a 10 ft setback. Which rule must be followed?

A

The deed restriction ( the strictest restriction)

68
Q
A
69
Q
A

Principles of real estate II (1 decks)

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