Real Estate U Questions Part II Flashcards
What determines how much a property owner pays in taxes? ALocal tax laws BThe property owner CThe government itself DThe fair market value of a home
Local tax laws
What is the millage rate?
AIt’s the same as the tax rate
BMillage is the value of a home, based on a million points
CThe amount the property owner has to pay over the existing property taxes
DIt is equal to $1,000
It’s the same as the tax rate
Note: The tax rate is also known as the millage rate.
What does 10 mills equal? A1 percent of the assessed value of the property B10 percent of the home’s value C$10,000 (Dollars) D10 times the value of the home
1 percent of the assessed value of the property
Are special tax assessments deductible?
ANo, generally they are not deductions like traditional property taxes
BYes, up to $10,000
COnly if the property is worth less than $500,000
DYes, there is a standard deduction of $10,000
No, generally they are not deductions like traditional property taxes
What is a tax lien?
AA tax lien occurs when taxes are not paid
BThis is the name for the taxes associated with the property
CA fine paid as a result of nonpayment of taxes
DA sign of foreclosure
A tax lien occurs when taxes are not paid
Note: If a homeowner fails to pay their property taxes, the government will place a tax lien on the property.
What is the Georgia tax rate based on? AOne mill tax rate is equal to $1 for every $1,000 of assessed value B10 percent of the property’s value C1 percent of the property’s value DWhatever the Tax Commission says
One mill tax rate is equal to $1 for every $1,000 of assessed value
Does the property owner have to file a property tax return every year?
ANot if the property owner pays the taxes in the year before at the same rate
BYes
CYes, but only if there is a change in value of $10,000 or more
DNo, unless the property owner wants to challenge the value
Not if the property owner pays the taxes in the year before at the same rate
Note: If the owner files a return or pays taxes on their property the year before and then does not file a return for the current year, they are considered to have filed at the same valuation of the previous year. The same exemptions, if they apply, are maintained for the second year. And, any taxes owed the previous year are to be paid for the current year.
Who can claim an exemption on property?
AThe person who owns the home and the land under it
BThe owner of the property listed on the deed
CAnyone living in the home
DThe person paying taxes
The person who owns the home and the land under it
Note: Under Georgia law, a homeowner can claim an available exemption, such as the homestead exemption, if they own the property and the land under it. It must have been their legal residence as well. The individual must have met these requirements as of January 1 of the taxable year.
What is the floating inflation-proof exemption?
ADeducts up to $30,000 based on natural increases in property values
BA deduction of the standard rate of inflation for the year
C$10,000 deduction to all homeowners
DA standard 3% decrease in assessed values each year
Deducts up to $30,000 based on natural increases in property values
Note: It’s available to those who are over 62 years old. It applies to state and county taxes but does not apply to taxes to pay for interest or to pay off a bond debt. This exemption is based on the market increases in the property’s value. If the home’s appraised value jumps by $10,000, then the property owner can claim this exemption. The exemption cannot be more than $30,000. There are also income limits on this type of exemption. And, it cannot impact any city or educational taxes.
If a person is in rehab for some of the year, can the homestead exemption apply?
AYes, as long as someone alerts the taxing commission of this
BNo, a person must live in the home the entire year
CNo, unless the person lives at least half the year in the home
DYes, but only a portion of it applies
Yes, as long as someone alerts the taxing commission of this
Note: To qualify for the homestead exemption, the property owner must live in the home itself. It has to be his or her legal residence (as the owner). There are some exceptions to this. For example, if a person is away from his or her home for a period of time due to health reasons, the taxing authority is not going to deny the exemption. However, someone, such as a family member or a friend, has to let the tax commissioner know of this. It cannot be assumed.
When can the property owner appeal a decision of the County Board of Equalization?
AAfter an initial appeal or after a hearing officer decision
BOnly after two appeals
CAfter a hearing officer only
DAt any time they do not agree with the previous decisions
After an initial appeal or after a hearing officer decision
How does an appeal to the Superior Court occur?
AThe County Board of Tax Accessors must send a notice of appeal to the Superior Court
BThe property owner needs to file a form for Superior Court
CIt is only if the Superior Court decides to hear the case
DAt any time after the Arbitrator hears the case
The County Board of Tax Accessors must send a notice of appeal to the Superior Court
Note: The County Board of Tax Accessors will deliver notice of the appeal and provide a copy of the appeal to those involved. The Superior Court hears the appeal, usually in front of a jury. If the Superior Court rules in favor of the property owner, it is possible for the property owner to recover some of his or her fees such as attorney fees and appeal hearing fees. The decision made by the Superior Court is then considered final.
How much do homeowners pay in property taxes?
AIt depends on property tax rate
BA set dollar amount established by the government
CThe amount they paid last year
DA set percentage of the appraised value
It depends on property tax rate
Note: Local tax rates determine how much one pays in property taxes.
What is the average millage rate in Georgia? A30 mills B10 mills C1 mill D15 mills
30 mills
What is the Homestead Exemption? A$2,000 exemption for state, county or school taxes B$10,000 discount on income taxes C1 percent of the home’s value D10 percent of the home’s value
$2,000 exemption for state, county or school taxes
Note: The standard homestead exemption is the most commonly used one. If an owner qualifies for the exemption, a $2,000 exemption is available that can be applied to the state, county or the school taxes owed to cities. This cannot be used to pay off interest on or to pay off bonded indebtedness. The $2,000 is not given as a check – this is not a refund. Rather, it is deducted from the assessed value of the home.
What is the disabled veteran and surviving spouse exemption?
AUp to $60,000 plus an additional sum for state, county, city, and schools
BUp to $10,000 plus costs associated with education needs
CA 10 percent deduction on taxes applicable to veterans
DA $20,000 deduction based on the property owner’s service record
Up to $60,000 plus an additional sum for state, county, city, and schools
Note: Disabled veteran and surviving spouse exemptions also exist. An exemption of up to $60,000 plus an additional sum from the payment of taxes for state, county, city, and schools is available to those who are a qualifying disabled veteran.
What value is most commonly used for commercial property? AValue in use BMortgage Value CInvestment Value DInsured value
Value in use
How often is the square foot method of valuation used?
ASeldom because it is the least accurate.
BAlways, because it is the most accurate.
CIt is used only in residential sales.
DIt is used only in retail shopping center sales.
Seldom because it is the least accurate.
Note: The square foot method is a cost approach to valuation that essential lumps the entire structure into one price-per-square foot number.
What is the formula used when using the income capitalization approach?
ANet Operating Income/Capitalization Rate = Market Value
BNet Operating Income/Interest Rate = Market Value
CGross Operating Income/Capitalization Rate = Market Value
DNone of the answer choices provided are correct
Net Operating Income/Capitalization Rate = Market Value
Note: The NOI is the cash flow from a property. When you divide this number by the capitalization rate for the property, you get the value of the property.
What is the formula for capitalization rate?
ANet operating income/sales price = capitalization rate
BGross operating income/sales price = capitalization rate
CGross operating income/rebuilding costs = capitalization rate
DNet operating income/interest rate on loan = capitalization rate
Net operating income/sales price = capitalization rate
Note: Cap Rate equals the NOI divided by the sales price. Please remember this formula.
How does an appraiser get vacancy and missed payments data?
AThey use information from similar recent sales.
BThey estimate property will always be 20 percent vacant and one missed payment a year.
CThey do not get it, they do not need it.
DThe property owner tells them the numbers.
They use information from similar recent sales.
Note: The going vacancy rate for similar buildings in the area may be used.
There are four properties an appraiser must value. One is a three unit home, one is a shopping mall, one is an office building, and one is a church. Which ones can be appraised using income capitalization?
AThe shopping center and the office building.
BAll four can be appraised using income capitalization.
COnly the church and the three unit home.
DThe shopping center, the three unit home and the office building.
Income producing properties are valued using the income approach. These include office buildings and shopping centers.
The shopping center and the office building.
Note: Income producing properties are valued using the income approach. These include office buildings and shopping centers.
What are the four factors that influence value?
ASocial, economic, construction costs, governmental.
BSocial, economic, property location, governmental.
CProperty condition, economic, property location and governmental.
DSocial, available financing, construction costs, governmental.
Social, economic, construction costs, governmental.
What is the principle of substitution?
AThe ability to acquire another property that is both desirable and similar in a short period of time.
BWhen a more valuable property can be substituted for a lesser value.
CWhen it takes a long time to find a similar home.
DWhen building a home costs more than moving into one.
The ability to acquire another property that is both desirable and similar in a short period of time.
Note: The principle of substitution affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.
What does utility mean?
AThe more useful a property, the higher the value.
BThe local utilities going to a property.
CThe best use of a property.
DThe useful life of a property.
The more useful a property, the higher the value.
Note: Utility is defined as the ability to give satisfaction and/or excite desire for possession.
What is reconciliation?
AThe final step in reaching a market value after the appraisal process.
BThe first thing an appraiser does before starting an appraisal.
CReconciliation is the average of all three values obtained during appraisals.
DThe second step in the appraisal process.
The final step in reaching a market value after the appraisal process.
Note: Reconciliation is defined as the final stage in the appraisal process where the appraiser reviews the data and estimates the subject property’s value.
The NOI plus the total expenses of a property equals which of the following? AEffective gross income BGross income CCash flow DAfter-tax cash flow
Effective gross income
Note: The effective gross income equals the NOI plus expenses. The effective gross income is the total income collected from the property.
Which of the following may be used to reduce the taxable income on a property?
AWrite-off of interest paid on the mortgage
BWrite-off of principal paid on the mortgage
CWrite-off of insurance paid on the mortgage
DAll of these items may be used
Write-off of interest paid on the mortgage
An agreement between members of a trade to exclude other members from fair participation in the trade is known as...? AGroup boycott BMarket allocation CPrice fixing Dtie-in agreement
Group boycott
The Sherman Anti-Trust Act was enacted in 1890 in order to…?
Astop practices that restrain trade and encourage competition in the marketplace.
Bregulate the real estate industry.
Ckeep the marketplace well-regulated.
Dprevent financial competition from getting out of hand.
stop practices that restrain trade and encourage competition in the marketplace.
Note: The Sherman Anti-Trust Act outlawed monopolistic business practices.
Robin has been having a record year as a salesperson, but feels she could be doing even better if she hired an assistant to help her organize her paperwork, listings, and advertisements. Which is true?
ARobin is allowed to hire an assistant to help her
BRobin may only hire a licensed real estate salesperson to assist her with these tasks
CRobin must first receive permission from her sponsoring broker before hiring an assistant
DRobin is prohibited by her independent contractor agreement from hiring an assistant to help with anything that is related to real estate
Robin is allowed to hire an assistant to help her
Note: Salespersons are allowed to hire their own assistants to work for them as an employee.
Which statement is true about real estate commissions?
Aall of the answer chices provided are correct.
Bthe seller’s broker might have to split their commission with the buyer’s broker.
Cit is usually calculated as a percentage of the sale price, but can also be a flat rate.
Dit is spelled out in the listing agreement.
all of the answer chices provided are correct.
Note: All of the answer choices provided are true.
Joan works for her broker, Bill. Joan has created a vector for graphics that she has been using to create ads for all of her clients, and they have become extremely popular. Joan has decided to move on to a different agency, but Bill would like to keep the vector graphics that Joan has created. Which is true?
AJoan owns her own work, unless her independent contractor agreement states otherwise
BJoan worked for Bill, and he owns any work she created while working for him
CIt depends whether Joan was in the office or at home when she created the graphics
DIt depends on how much total income Joan has earned from working at that brokerage
Joan owns her own work, unless her independent contractor agreement states otherwise
Note: Bill will retain any listings that Joan worked on; however, Joan may keep the graphics she created. Bill will have to make his own graphics for the listing.
Which statement is true of the third party in a real estate agency relationship?
AThe third party is called the customer.
BThe third party is only the person who actually buys the house, not potential buyers.
CThe third party is only potential customers, not the person who actually buys the house.
DThe third party is everyone who is not the agent, principal or subagent, including all real estate agents, mortgage brokers and home inspectors.
The third party is called the customer.
Note: In every transaction, you have the principal, the broker, and a customer. For example, a listing broker represents the seller (the principal) and shows the property to prospective buyers (the customers).
Who are the parties that are ALWAYS involved in an agency relationship?
AThe principal, the agent and at least one third-party.
BThe agent and a subagent only.
CThe principal and the agent only.
DThe principal, the agent a subagent only.
The principal, the agent and at least one third-party.
Note: In every transaction, you have the principal, the broker, and a customer. For example, a listing broker represents the seller (the principal) and shows the property to prospective buyers (the customers).
All of the following properties are covered by the FHA, except for…?
ASingle family homes, when the owner owns less than 3 properties
BBuildings with 5 or more units
CFederally owned property
DMulti-family properties
Single family homes, when the owner owns less than 3 properties
Note: The FHA establishes that most single family homes are exempt, as long as the owner owns less than 3 properties.
The landmark Supreme Court case that confirmed the Civil Rights Act was legal was...? AJones versus Alfred H. Mayer Company BSmith versus Alfred H. Mayer Company CJones versus Smith Company DJones versus Smith
Jones versus Alfred H. Mayer Company
The ADA is divided into how many 'titles'...? A5 B2 C3 D4
5
The organization in charge of enforcing and regulating the Fair Housing Act is called…?
AThe Department of Urban Housing and Development
BThe Equal Opportunity Organization
CThe Federal Oversite Board
DThe Federal Housing Administration
Correct Answer: A Your Answer: A
The Department of Urban Housing and Development
The Civil Rights Act of 1968 is commonly referred to as? ATitle VIII BChapter VII CTitle VI D7th amendment
Title VIII
Another clause that is good to include in your listing agreement places constraints on the sale of the home to anyone the listing agent has shown it to. The seller will not be able to sell the home to these prospects within 6 months to one year after the contract ends. Choose the best answer regarding this statement.
AThis protects the listing agent in a listing contract.
BThis is invalid after the listing agreement expires.
CThis is illegal.
DThis protects the seller after the listing agreement expires.
This protects the listing agent in a listing contract.
Note: This clause is added to protect the broker and ensure they earn a commission if they secure a buyer who eventually purchases the property.
What role refers to the responsibility you have to act as an agent, or champion, for your client? AFiduciary BOLDCAR CConfidentiality DAppraiser
Fiduciary
Note: An agent owes full fiduciary duties to the client.
Under which of the following circumstances is additional court or lender approval probably not required for a real estate listing?
AThe property is a “fixer-upper.”
BSeller has filed for bankruptcy.
CSeller is involved in divorce proceedings.
DThe sale will be a “short sale.”
The property is a “fixer-upper.”
Note: Bankruptcy and divorce are both subject to court proceedings. The lender must approve a short sale, since they are taking a loss on the loan. A fixer-upper does not need an approval from the lender or a court.
A "Lead-Based Paint" Exhibit is required for property constructed before…? A1978 B1988 C1973 D1983
1978
Note: Remember the phrase “lead-based paint, 1978”.
If a seller defaults on the “Exclusive Seller Listing Agreement”, which of the following expenses are they responsible for?
AAll of the answer choices provided are correct.
BRealtor commissions.
CCosts of removing the property from the MLS.
DThe broker’s out-of-pocket expenses, including advertising, mileage, printing, and copying.
All of the answer choices provided are correct.
Note: In addition to being responsible for the agreed-upon real estate commissions as specified earlier in the agreement, a seller who defaults also owes the broker for out-of-pocket expenses and costs including mileage, printing and copying, and advertising costs, including expenses related to removing the listing from the MLS. Brokers also have the right to pursue other remedies when sellers default.
When signing the “Exclusive Seller Listing Agreement,” the seller agrees to hold the broker harmless in which of the following scenarios?
AAll of the answer choices provided are correct.
BLoss or theft of the seller’s personal property.
CDamage to the seller’s property due to dangerous conditions.
DThe seller’s failure to adhere to the terms of the agreement.
All of the answer choices provided are correct.
Note: The seller also agrees to hold the broker harmless if something goes wrong related to the seller’s negligent actions, the seller’s failure to disclose complete and accurate information to the broker, the loss or theft of the seller’s personal property, damage to the property due to dangerous conditions or due to the seller’s failure to secure animals, or the seller’s failure to adhere to the terms of a purchase and sale agreement.
