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2020 Oregon Broker Real Estate Exam Prep > PSI Exam Prep > Flashcards

PSI Exam Prep Flashcards

1
Q

A person agrees to sell a property for $500,00. The buyer gives the seller $150 as valuable consideration for a six-month option. Which of the following statements are true?

A. The $150 is valuable consideration if the seller accepted it.

B. The buyer must have at least 5% down as valuable consideration

C. The buyer must have at least 20% down.

D. The seller cannot accept money for the option.

A

A. The $150 is valuable consideration if the seller accepted it.

  • “Valuable consideration” is a necessary component of all contracts. It is the benefit one party receives in exchange for granting benefit to the other. Generally it is money in any amount both parties agree to, though it can take other forms such as personal property, work or refraining from an act.
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2
Q

Which of the following activities is a violation of the Federal Fair Housing Act?

A. a nonprofit church that denies access to it retirement home to any person because of race.

B. a nonprofit private club that gives preference in renting units to its members at lower rates.

C. the owner of a single-family residence selling his/her own home who gives preference to a buyer based on his/her sex.

D. discrimination in the sale of a warehouse based on the prospective purchaser’s gender.

A

A. A nonprofit church that denies access to its retirement home to any person because of race.

  • The private club is exempt because its preferential treatment is based on its membership; the home owner is exempt, so long as he is selling his home without a broker; the warehouse is exempt because its not a housing unit.
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3
Q

A Saving & Loan institution would be violating the Federal Fair Housing Act by denying a loan to Mr. and Mrs. Happy Borrower for which of the following reasons?

A. low earnings

B. too old

C. too many loans

D. minority background

A

D. Minority Background

-Fair Housing and other anti-discrimination legislation doesn’t force lenders or others to abandon sound business practices (such as denying loans to unqualified borrowers), merely to be fair and equally accessible to all people.

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4
Q

The Civil Rights Act of 1866 prohibits discrimination in housing based on which of the following reasons?

A. race

B. religion

C. sex

D. marital status

A

A. Race

  • Although surprising to many, the original civil rights legislation was passed in 1866 – by one vote over the veto of President Andrew Jackson.
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5
Q

An agent working as a subagent of the seller would suggest that the buyer hire an inspector from an outside service in all of the following cases EXCEPT:

A. when they smell gas in the basement

B. when there is a slow drain in the toilet

C. when a hinge is off the door

D. when there is sawdust in the kitchen cabinets

A

C. When a hinge is off the door

  • Home inspectors are hired to find significant and often hidden property defects, such as signs of a leaking roof, termites, foundation cracking and so forth. Hinges and other “wear and tear” items are obvious and not among the reasons for hiring an inspector.
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6
Q

The federal anti-discriminatory laws apply to which of the following?

A. a broker selling a single-family home

B. a private club not open to the general public

C. office building sales

D. the rental of industrial property

A

A. a broker selling a single-family home

-Civil rights laws apply to owners of residential property, rental units, hotels, and virtually any other building offering housing or accommodations to the general public.

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7
Q

A tenant complained to HUD about his landlord’s discriminatory practices in his/her building. A week later the landlord gave the tenant an eviction notice. Under which of the following situations would the Federal Fair Housing Act be violated?

A. when the tenant is two months behind on his/her rent

B. when the landlord evicts the tenant for reporting him to HUD

C. when the tenant has damaged the premises

D. when the tenant is conducting an illegal use on the premises

A

B. When the landlord evicts the tenant for reporting him to HUD

  • Anti-discrimination laws do not apply to situations that are in violation of generally accepted policies such as paying rent on time, maintaining the premises, and abiding by use agreements.
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8
Q

The Federal Fair Housing Act states that a prima facie (at first view) case against a broker for discrimination be established after a complaint had been received because the broker has failed to do which of the following?

A. The broker has failed to display a HUD Equal Opportunity poster.

B. The broker has failed to join an affirmative marketing program.

C. The broker has failed to join the HUD anti-discriminatory task force.

D. The broker has failed to attend mandatory classes on fair housing.

A

A. The broker has failed to display a HUD Equal Opportunity poster.

  • Included among Fair Housing regulations is the requirement that the HUD Equal Opportunity signage be prominently displayed.
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9
Q

A broker is discussing a new listing with a prospective Mexican American buyer. The buyer wants to inspect the property immediately, but the owner of said property has instructed the broker, in writing, not to show the house during the owner’s three-week absence. The buyer insists on viewing the property. The broker should:

A. Show the property to avoid a violation of the Federal Fair Housing Act.

B. Request the Real Estate Commission arbitrate the problem

C. Inform the buyer of the seller’s instructions

D. Notify the nearest HUD office.

A

C. Inform the buyer of the seller’s instructions

  • Following an owner’s lawful instructions is not only allowable but a responsibility of the licensee. However, if the owner instructed the broker to tell minority buyers that he was out of town when he was not in order to avoid selling to a minority, the broker would be in violation of the law if he acted as the owner requester.
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10
Q

A three-story apartment complex built in 1965 does not meet with the handicapped access provisions for the 1988 Fair Housing Act. The owner must:

A. Make the ground floor handicapped accessible

B. Make the 1st and 2nd floors accessible

C. Make the entire building accessible

D. The owner doesn’t have to comply since it’s less than 4 stories.

A

A. Make the ground floor handicapped accessible

  • Because the building was constructed before the 1991 standards went into effect, only the first floor needs to be modified.
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11
Q

Real Property can be converted to personal property…

A

SEVERANCE

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12
Q

A broker is teaching newly hired salespersons the correct way to complete a listing agreement form. The broker is attempting to show the value of putting the correct property address on the listing. The BEST visual aid to help them learn how to do so accurately would be…

A

A SUBDIVISION PLAT

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13
Q

The main difference between tenancy in common and joint tenancy is that with tenancy in common, when a co-owner dies…

A

THEIR UNDIVIDED INTEREST PASSES TO THEIR HEIRS

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14
Q

Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with the property. In others, all water rights are controlled by the state under the doctrine of…

A

PRIOR APPROPRIATION

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15
Q

A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor?

A

A LICENSE

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16
Q

A distinguishing characteristic of owning property by land trust is that…

A

THE IDENTITY OF THE LEGAL OWNER IS KEPT CONFIDENTIAL

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17
Q

A potential buyer is interested in the residential property of your client. The buyer earns a living by making crafts and selling them from home and caring for children in the late afternoons. In this situation…

A

SUGGEST THE BUYER CHECK THE ZONING ORDINANCES

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18
Q

If conditions for property use are included in a deed and these conditions are violated, what is the most severe potential penalty?

A

A COURT MAY ORDER THE RETURN OF THE PROPERTY TO THE ORIGINAL OWNER.

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19
Q

New sidewalks installed only on one particular street will probably be paid for by…

A

A SPECIAL ASSESSMENT

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20
Q

A property owner died, having willed his real property to his two daughters. There is still a chance that they could lose the land for a variety of reasons, but it CANNOT be taken through…

A

ESCHEAT

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21
Q

Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price?

A

THE FIRST SOLD

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22
Q

When compiling competitive market analysis, a broker would look for comparable properties that…

A

WERE LOCATED NEAR THE PROPERTY BEING LISTED

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23
Q

A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of…

A

ANTICIPATION

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24
Q

A formal appraisal will ALWAYS be REQUIRED when the…

A

LENDER WANTS TO SELL THE MORTGAGE TO THE SECONDARY MARKET.

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25
Q

According to the Truth-in-Lending Act, if any “trigger terms” are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the…

A

PREPAYMENT PENALTIES AND REBATES

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26
Q

When a home is purchased using an ARM, the monthly loan payment on the mortgage will…

A

VARY OVER THE LIFE OF THE LOAN DEPENDING ON FLUCTUATIONS IN THE INTEREST RATE TO WHICH THE LOAN IS REFERENCED

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27
Q

A broker and the buyers he represents are anxiously awaiting the closing on their new home. The closing is scheduled in 4 days. The buyers inform the broker that they just received revised Loan Estimate and Closing Disclosure forms from the lender, indicating the Annual Percentage Rate on their loan has increased by 0.3%. Based on the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this situation?

A

CONFIRM WITH THE SELLER’S BROKER, THE LENDER AND THE CLOSING ENTITY THAT THE CLOSING MUST BE DELAYED TO ALLOW FOR A NEW SEVEN-DAY WAITING PERIOD BECAUSE OF THE INTEREST RATE REVISION.

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28
Q

The FHA functions MOST like…

A

AN INSURANCE COMPANY

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29
Q

For a buyer, a DISADVANTAGE of a partially amortized or balloon payment loan is that…

A

AT THE END OF THE TERM, ALL REMAINING PRINCIPAL MUST BE PAID IN A SINGLE LARGE PAYMENT.

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30
Q

In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, in the instance that…

A

THE ORIGINATOR AND LENDER ARE PART OF SAME COMPANY

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31
Q

A licensee has entered into a dual agency agreement. In this situation, it is critical that all parties understand that it is impossible for the licensee to fully perform for either party the traditional common-law agency duty of…

A

LOYALTY

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32
Q

The real estate agency relationship is best described as the

A

BROKER’S REPRESENTING THE PRINCIPAL.

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33
Q

A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship?

A

AGENCY COUPLED WITH AN INTEREST

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34
Q

A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is…

A

AN AGENT TO THE BROKER AND A SUBAGENT TO THE PRINCIPAL

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35
Q

An exclusive right to sell listing obtained by a broker associate belongs to…

A

THE EMPLOYING BROKER ONLY

36
Q

The day after a broker’s listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that…

A

HE IS NO LONGER THE LISTING AGENT

37
Q

A real estate salesperson is representing only the buyer in a transaction. Which of the following actions would be a violation of the salesperson’s agency duties to the client?

A

DISCLOSING THE HIGHEST PRICE THE BUYER IS WILLING TO PAY

38
Q

An agency relationship between a property owner and a property manager is usually created by…

A

A MANAGEMENT AGREEMENT

39
Q

The listing broker is showing a home to a buyer whom she is not representing. The buyer asks about the condition of the roof. How should the broker respond?

A

SHE SHOULD ADVISE THE BUYER TO RETAIN THE SERVICES OF AN INSPECTOR TO DETERMINE THE INTEGRITY OF THE ROOF.

40
Q

The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, …

A

REQUIRE THE BUYER TO ACKNOWLEDGE DISCLOSURE OF THE PRESENCE OF ANY KNOWN LEAD PAINT

41
Q

While touring a new listing a broker detects a very pronounced moldy odor. Upon inspection, the broker finds that all closets located on a particular wall in the vacant residence are extremely moldy. The mold growths are heavy, multi-colored, and cover the lower back walls and part of the sidewalls and flooring of the closets, and the other associates on the tour are experiencing sneezing and watering eyes. The broker has already accepted the listing. What immediate action should the broker take regarding the listing status?

A

INFORM THE SELLERS IN WRITING THAT THERE IS A POSSIBLE HEALTH HAZARD THAT SHOULD BE INSPECTED AND, IF NECESSARY REMEDIATED, AND THE LISTING WILL BE REMOVED FROM THE ACTIVE LIST UNTIL SUCH ACTION IS TAKEN.

42
Q

What critical aspect of the property inspection process MUST licensees convey to prospective buyers?

A

NEED FOR INSPECTION TO BE COMPLETED WITHIN THE TIME STATED IN THE CONTRACT.

43
Q

A buyer made an offer on an apartment building. The offer was not acceptable to the seller. When the buyer refused to accept the seller’s counteroffer, the seller agreed to accept the original offer. What MUST happen now?

A

NOTHING; BY MAKING A COUNTEROFFER THE SELLER RELEASED THE BUYER FROM THE ORIGINAL OFFER.

44
Q

A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have?

A

THE BUYER MAY SUE THE SELLER FOR SPECIFIC PERFORMANCE

45
Q

Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release?

A

THE BUYER FINDS A BETTER PROPERTY FOR BETTER TERMS

46
Q

A seller signs a listing agreement with a broker. The seller can cancel the listing at any time without legal liability if…

A

THE BROKER VIOLATES THE TERMS OF THE CONTRACT

47
Q

A contract for the sale of a home has been signed by both parties. This contract will remain executory until…

A

THE TRANSACTION HAS CLOSED

48
Q

When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should

A

HAVE SHORT DEADLINES

49
Q

A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable?

A

THE SELLER IS HEAVILY UNDER THE INFLUENCE OF ALCOHOL AT THE TIME OF SIGNING.

50
Q

If the terms of a contract indicate that Party A will be obliged to perform her part of the contract only if Party B chooses to take a certain action, then the contract is a…

A

UNILATERNAL CONTRACT IN WHICH ONLY PARTY A HAS MADE A PROMISE TO PERFORM.

51
Q

A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so?

A

THE PERSON APPOINTED BY THE COURT TO ACT FOR THE DISABLED PERSON MUST CONTRACT ON HIS OR HER BEHALF.

52
Q

A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when…

A

THE SELLER ACCEPTS THE OFFER

53
Q

While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement may be unenforceable because…

A

THE AGREEMENT DOES NOT COMPLY WITH THE STATUE OF FRAUDS

54
Q

A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as…

A

VOID

55
Q

Tenants are still in their rental property even though their lease has expired. The landlord has given them written notice to quit and refused to accept rent. They are…

A

TENANTS AT SUFFERANCE

56
Q

A gross lease can be best defined as one where the tenant pays, as a part of the rent, …

A

NO OPERATING EXPENSES OF THE LEASED SPACE

57
Q

A landlord may legally refuse to rent to a prospective tenant if the tenant…

A

HAS EVER BEEN CONVICTED OF SELLING ILLEGAL DRUGS

58
Q

A couple is moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the couple’s needs?

A

MONTH-TO-MONTH LEASE

59
Q

For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income?

A

MORTGAGE LOAN INTEREST, LOCAL PROPERTY TAXES, MORTGAGE LOAN ORIGINATION FEES.

60
Q

To be valid, every deed must…

A

BE EXECUTED BY THE GRANTOR

61
Q

In MOST states, foreclosed property is sold through…

A

PUBLIC AUCTION

62
Q

What is the duration of a home warranty’s coverage?

A

AS DISCLOSED IN THE CONTRACT THAT OFFERS THE WARRANTY

63
Q

An exception to title insurance coverage is…

A

DEFECTS THAT CLEARLY APPEAR IN THE TITLE SEARCH

64
Q

Which of the following statements best describes the risk taken by NOT recording a deed?

A

A SUBSEQUENT PURCHASER’S RECORDED DEED COULD TAKE PRECEDENCE OVER ANY UNRECORDED INSTRUMENT.

65
Q

In an effort to improve his brokerage a broker decides to streamline his handling of escrow/deposit funds. This streamlining can BEST be achieved by…

A

FOLLOWING STATE LAW BUT HAVING AS FEW INDIVIDUALS AS POSSIBLE HANDLE THE FUNDS BEFORE THEY ARE DEPOSITED.

66
Q

Why was the Jones vs. Mayer decision of 1968 important?

A

BY UPHOLDING THE CIVIL RIGHTS ACT OF 1866, THE SUPREME COURT REMOVED ALL EXCEPTIONS TO RACIAL DISCRIMINATION IN HOUSING.

67
Q

Antitrust laws prohibit competing brokers from all of the following EXCEPT…

A

RECEIVING COMPENSATION FROM BOTH THE BUYER AND THE SELLER.

68
Q

A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that …

A

THERE IS NO DOLLAR LIMIT ON DAMAGES PAID

69
Q

Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising?

A

“CATHOLICS PREFERRED”

70
Q

A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not?

A

NO, BECAUSE IT IS APPROPRIATE TO SHOW ANY PROPERTY FOR WHICH THE BUYER IS QUALIFIED.

71
Q

A broker did NOT have a written independent contractor agreement with his salesperson. While showing homes to a family, the salesperson was involved in a car accident in which a child in her car was injured. Could the broker be held liable in this situation, and why?

A

YES; THE LACK OF AN INDEPENDENT CONTRACTOR AGREEMENT MAY CLASSIFY THE SALESPERSON AN EMPLOYEE AND AN EMPLOYER MAY BE HELD LIABLE FOR THE TORTS OF AN EMPLOYEE.

72
Q

A real estate brokerage company has developed standardized policies regarding the inventory of properties to be shown to prospective buyers, the company’s standards for qualifying buyers, and documentation of all conversations and showings. These policies can help the firm defend itself in the event of an accusation of discrimination, but only if the policies …

A

REQUIRE EVERY LICENSEE IN THE FIRM TO FOLLOW THEM CONSISTENTLY

73
Q

A salesperson in a branch office is sued for damages by a buyer after the salesperson misrepresents a property. Who has the ultimate responsibility for the salesperson’s actions?

A

THE SUPERVISING BROKER

74
Q

An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?

A

$90,426

75
Q

An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?

A

$267

76
Q

Kevin is preparing a Comparative Market Analysis (CMA) on a commercial net leased office property that has 100% occupancy and income of $67,000, with expenses of $22,000 and a management fee of 5% of the gross income. The property is assessed by the municipality at $575,000. If Kevin considers a 9% rate of return to be reasonable for this income property, what would Kevin recommend as the listing price?

A

$745,000

77
Q

A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.)

A

$407

78
Q

If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month?

A

$1,150

79
Q

An owner lists her home at a 7% commission rate and wants to net $45,000 after paying the mortgage balance of $68,000 and the broker’s commission. To the nearest dollar, what should the selling price be to net her $45,000?

A

$121, 505

80
Q

Refer to the scenario below.

You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card.

The Martins come to your office and explain that neither Mary nor her supervising broker are available. They insist you immediately write an offer for the house. How should you proceed?

A

WRITE THE OFFER AFTER ENTERING INTO A BUYER’S BROKER AGREEMENT WITH THEM.

81
Q

Refer to the scenario below.

You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card.

The first thing on Monday morning, Mrs. Martin calls and indicates they have tried to reach Mary and cannot. They indicate they have a written buyer’s agent agreement with Mary’s broker. They are afraid someone else is going to buy the house. Which of the following should you do?

A

TELL THEM TO CALL MARY’S SUPERVISING BROKER OR BRANCH MANAGER

82
Q

A broker learns that one of the licensees under his supervision, and the owners of a listed property, have worked out a scheme to withdraw a property from the market whenever a showing is requested by any buyer who seems to be from a foreign country. What is the most important action for the broker to take in this situation?

A

PUT THE LICENSEE ON PROBATION AND REQUIRE HER TO TAKE A FAIR HOUSING CLASS.

83
Q

Refer to the scenario below.

You are the supervising broker of a real estate company. On August 1, one of your licensees listed a house owned by an investor client. On August 10, a full-price offer was received from the buyer’s agent, a licensee with a cooperating real estate company, and accepted by the seller. The buyer’s agent indicated that the buyer is a transferee. The sale is to close on September 10, but on September 5, the buyer’s agent informs the seller’s agent that his client is not going to close and wants the earnest money refunded. Your firm is holding the earnest money.

Which information is the most critical to be obtained?

A

VERIFYING IF THERE IS A CLAUSE IN THE PURCHASE AGREEMENT REGARDING THE DISBURSEMENT OF EARNEST MONEY FOLLOWING DEFAULT.

84
Q

In the property condition disclosure form under “Asbestos”, a broker reviewing an associated licensee’s listing sees that the property owner reported that the asbestos siding on his building was not removed but was professionally encapsulated ten years ago. Documentation of this professionally applied process is attached. The broker should …

A

HAVE THE LISTING AGENT VERIFY THE LICENSE OF THE FIRM THAT PERFORMED THE ENCAPSULATION PROCESS.

85
Q
A

2020 Oregon Broker Real Estate Exam Prep (6 decks)

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