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.
Which of the following is not likely to be the subject of a pamphlet or exhibit included with the "Exclusive Seller Listing Agreement"? AFinancing contingency BShort sales CAgency relationships DLead-based paint
Financing contingency
Note: Under Section 8 of the Exclusive Seller Listing Agreement, brochures or pamphlets the seller may receive include information about short sales or selling distressed properties, agency relationships, lead-based paint, mold, and radon.
If a third party is required to approve the sale of property under the "Exclusive Seller Listing Agreement", who is responsible for obtaining such approval? AThe seller BThe broker CThe buyer DThe title company
The seller
Note: If a third party is required to authorize or approve the sale, the onus is on the seller to meet such requirements.
Statistically, sales way above or way below the bulk of available comparables are not useful. What should you do with these prices in a CMA?
AIgnore them.
BInclude them.
CThrow out the analysis and use properties from another community.
DGo to lunch.
Ignore them.
Note: The sales prices that are too high and too low should not be used in the CMA.
When conducting a comparative market analysis, the final value of the subject property is also known as the…? AReconciled price BIndicated value CAssessed value DAdjusted value
Reconciled price
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.
Lionel Malcolm is a real estate agent representing seller Morty Rosenbaum. Morty tells Lionel that he knows that the basement contains asbestos and that Morty and his wife are unable to pay for the costly removal process. Instead, Lionel frantically tells Morty to keep this information under the lid. Morty agrees. Since state law requires that the seller disclose the presence of asbestos, Lionel and his hapless clients are committing ............ fraud by failing to disclose a material defect in an attempt to trick someone into buying the defective home at full market price. APassive BMassive CAggressive DMinimal
Passive
Note: Passive fraud occurs when a broker knowingly fails to disclose a defect about which the broker has actual knowledge, but which is unknown to the buyer.
Which is NOT an essential term of a real estate sales contract?
AA provision specifying the broker’s commission
BA legal description of the property to be sold
CA purchase price
DA closing date
A provision specifying the broker’s commission
Note: Please refer back to Lesson 28.1 Types of Contracts
Which of the following is considered a legal description of a property? AA metes and bounds description BA complete address, with zip code CA plot plan DAll of the above
A metes and bounds description
Note: Please refer back to Lesson 28.1 Types of Contracts
………... is when the court places the parties in the same position they were prior to making the contract and discharges the contract. ARescission BReformation CAn injunction DA breach
Rescission
Note: Please refer back to Lesson 28.6 Discharge of Contracts
Wilbert and Holly have a construction contract that provides, "In the event an act of god prevents Wilbert from completing construction of the planned structure, the parties agree that Wilbert shall pay Holly $10,000 dollars in damages." Such a provision is called...? Aa liquidated damages provision. Ba compensatory damages provision. Ca punitive damages provision. Dan expectation damages provision.
a liquidated damages provision.
Note: Please refer back to Lesson 28.6 Discharge of Contracts
Which of the following is an essential term of a real estate sales contract?
AThe purchase price
BA provision specifying the broker’s commission
CA summary of all previous owners to the property
DAll of the above
The purchase price
Note: Please refer back to Lesson 28.1 Types of Contracts
Which of the following is not necessary for an agent to be considered a "statutory nonemployee" of a brokerage firm? AAn independent contractor's license BAn agent's license CPay based on sales, not hours DA written agreement with the firm
An independent contractor’s license
Note: Please refer back to Lesson 28.1 Types of Contracts
………….. must provide enough detail about the essential terms of a deal that the other person can accept simply by saying, "Yes." AAn offer BAn acceptance CA contract. DAn invitation to treat
An offer
Tanya says to Gina, "Would you like to buy my house for $300,000?" Gina says, "I can’t afford that. Would you take $260,000." Tanya says, "OK." This is an example of: AAll of the above BOffer and acceptance CRejection and counteroffer DBargaining
All of the above
Note: Lesson 28.2 Essential Elements of a Valid Contract
Under the Fair Housing Act, it is legal to refuse to sell, rent, or lease a residence on the basis of a person's…? Apolitical views. Brace. Csexual orientation. Dfamilial status.
political views.
Which of the following can a court award while enforcing a contract? AExpectation damages BPunitive damages CImprisonment DPersonal services
Expectation damages
Note: Please refer back to Lesson 28.3 Legal Effects of Contracts
A contract made by a minor and an intoxicated adult may be…? AAll of the above Bvoidable by the minor. Cvoidable by the adult. Dunenforceable.
All of the above
Note: Please refer back to Lesson 28.3 Legal Effects of Contracts
Which of the following is NOT a ground for voiding a contract? ABreach BPhysical threat CUndue influence DUnconscionable contract
Breach
Note: Please refer back to Lesson 28.3 Legal Effects of Contracts
A ………... warns parties that failure to meet contract deadlines may cause breach. Atime is of the essence clause Breasonable time clause Ccalendar clause Dbroker
time is of the essence clause
Note: Please refer back to Lesson 28.4 Performance
Which is an example of an assignment? AAll the above BSubletting an apartment CSelling a mortgage loan DSelling someone a subway token
All the above
Note: Please refer back to Lesson 28.5 Assignment and Novation
Humboldt says, "I will sell you my dog next Friday for the sum of $50 and a bag of peanuts." Leroy replies, "I cannot make it next Friday, and I am allergic to peanuts. However, I would gladly buy your dog next Saturday morning for $50 and a bag of potato chips." This exchange is an example of...? AAll of the above Ba rejection Ca failure of the mirror image rule Doffer and counteroffer
All of the above
Note: Please refer back to Lesson 28.2 Essential Elements of a Valid Contract
The legal detriment test is a test for consideration. Under this test, consideration exists if…?
Aa party agrees to give up a legal right they have in exchange for something.
Bthe contract would not create a legal detriment.
Cthe parties agree consideration exists.
Dthe parties are unhappy about the deal.
a party agrees to give up a legal right they have in exchange for something.
Note: Please refer back to Lesson 28.2 Essential Elements of a Valid Contract
When a court interprets a contract, the court tries to find…? Athe intent of the parties. Bthe fairest interpretation. Cthe most sophisticated interpretation. Dthe easiest interpretation.
the intent of the parties.
Note: Please refer back to Lesson 28.3 Legal Effects of Contracts
Which of the following can a court award while enforcing a contract? AExpectation damages BPunitive damages CImprisonment DPersonal services
Expectation damages
Note: Please refer back to Lesson 28.3 Legal Effects of Contracts
Which of the following can be assigned? ANone of the above BA cocaine supply contract CA contract for personal services DA lease that prohibits subletting
None of the above
Note: Please refer back to Lesson 28.5 Assignment and Novation
In order to comply with federal regulations, ………... are responsible for reporting known hazards, such as radon in lead paint, to ………..., and remediating any issues discovered after the agreement is signed. Aowner(s), property manager Bproperty manager, owner(s) Cproperty manager, tenant Downer(s), city health department
owner(s), property manager
Note: The owner must disclose any known environmental issues to the property manager prior to signing a management agreement.
Which type of management market typically involves leasing compartmentalized units suitable for conducting business activities not related solely to manufacturing or warehouse operations? AOffice building management BResidential property management CNew construction development management DRetail enterprise management
Office building management
Note: This description best fits that of an office building.
If an agent is hurt at a client's home, the client's ………….insurance may cover the damages AHomeowners BWorkers compensation CLiability DAny of the above
Homeowners
Note: The client’s homeowners insurance typically covers this type of event, since it occurs on the client’s property.
…………... is made of galvanized sheet steel that is rolled or pressed into shapes that can be used for construction. ACold-formed metal framing BStructural steel framing CCast-in-place framing DWood framing
Cold-formed metal framing
Note: Only cold-formed metal framing is made from galvanized sheet steel.
A framing member that runs up and down the slope of a steep roof is known as a...? ARafter BJoist CFooting DRidge
Rafter
Note: This question refers to the definition of a rafter.
What is the most common type of roof shingle...? AAsphalt shingles BWood shingles CSlate shingles DFiberglass shingles
Asphalt shingles
Note: Asphalt shingles are the most common type of roof shingle in residential construction.
Sub-flooring in wood frame construction typically consists of what...? APlywood BMetal deck CConcrete metal deck DGypsum board
Plywood
Note: Plywood is typically used as sub-flooring in wood-framed construction. Metal deck is used on steel or cold-formed metal framing construction. Gypsum board is not used as sub-flooring.
…………. will stiffen the floor system, prevent joists from twisting, and increase the overall stability in the floor system. ABracing BTie-backs CRunners DHeaders
Bracing
Note: Bracing is used to stiffen a floor system.
The slope of a roof is also referred to as the...? APitch BGrade CElevation DRidge
Pitch
Note: This question refers to the definition of pitch.
Dimensional lumber used for structural elements is made of...? ASoftwoods BHardwoods CLaminated woods DVeneer woods
Softwoods
Note: Only softwoods are used for dimensional lumber used for structural elements.
Foundation walls are typically constructed of...? ACast-in-place concrete BWood frame CCold-formed metal framing DCMU
Cast-in-place concrete
Note: Foundation walls are almost always constructed of cast-in-place concrete.
………. rafters are used at the diagonal intersection of planes. AHip BRidge CSoffit DEave
Hip
Note: By definition, hip rafters are used at diagonal intersections of a roof.
What usually comes first in the real estate contract negotiation process?
AThe buyer makes an offer to the seller.
BThe seller sends out prospective offers to buyers.
CThe buyer must pay the listing price of the property.
DThe real estate agent sets the price based on their market research.
The buyer makes an offer to the seller.
Note: The first step in purchasing a property is to have the buyer make an offer on the property.
Under what circumstances could a seller be entitled to compensatory damages?
AIf the buyer causes damage to his property.
BA seller can never be entitled to compensatory damages.
CIf the seller’s damages cannot be calculated.
DIf the seller violates the terms of the contract.
If the buyer causes damage to his property.
Note: Compensatory damages are awarded in civil court cases where loss has occurred as a result of the negligence or unlawful conduct of another party.
Under certain circumstances, either the buyer or the seller may unilaterally extend the closing date by up to how many days? A8 days B30 days C45 days D20 days
8 days
FHA loans require borrowers to purchase mortgage insurance. What is the purpose of this requirement?
ATo protect the lender in case the borrower defaults on the loan.
BTo protect the homeowner if the property is destroyed or damaged.
CTo protect the lender if the property is destroyed or damaged.
DTo protect the homeowner if they become disabled while there is still an outstanding balance on their mortgage loan.
To protect the lender in case the borrower defaults on the loan.
Note: FHA loans require borrowers to purchase mortgage insurance, designed to protect the lender if the borrower defaults on the loan.
What is a collateral contract? AA contract to make another contract. BA contract to make a mortgage. CA contract for real estate. DA contract for movable goods.
A contract to make another contract.
Note: A collateral contract is an agreement associated as a second, or side contract made between the original parties, or between a third party and an original party.
What is the parol evidence rule? AExtrinsic evidence. BEvidence from within the contract. CEvidence offered by the seller. DEvidence that the court chooses to hear.
Extrinsic evidence.
Note: The purpose of the parol evidence rule is to prevent a party from introducing evidence of prior oral agreements that occurred before or while the agreement was being reduced to its final form in order to alter the terms of the existing contract.
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?
AReceiving a refund of the earnest money.
BBuyer can sue for the value of the real estate.
CBuyer can sue for specific performance of the contract.
DBuyer can sue for 1/2 the value of the real estate.
Receiving a refund of the earnest money.
Note: The seller will be in breach of contract, and the buyer will be able to get their earnest money back.
If a bankruptcy is discharged, what happens to payment obligations under a contract?
APayment obligations are canceled.
BThe payment obligation continues.
CThe payment obligation is reduced by 50%.
DThe payment obligation is eliminated if it is more than $100,000.
Payment obligations are canceled.
Note: The payment obligations are still canceled.
If the buyer takes out a new loan, the lender will require execution of a…? ASecurity deed BPromise to pay CBuyer’s deed DQuit-claim deed
Security deed
Note: If the buyer takes out a new loan, the lender will require execution of a security deed (also known as a “deed to secure debt” or “loan deed”) which is used in Georgia instead of a mortgage.
What does the buyer want to make sure the seller can convey? AMarketable title BAbsolute title CPaid title DTitle free of any outside interests
Marketable title
Note: The buyer always aims to receive clear and marketable title. The buyer will want to ensure there are no encumbrances on the property.
Which information can you usually find on the fourth page of the Closing Disclosure?
AAll of the answer choices provided are correct
BWhether the lender will allow someone else to assume the mortgage
CEarly repayment policies
DWhether the monthly payments will be too low to reduce the principal amount of the loan
All of the answer choices provided are correct
What is the primary piece of information the settlement agent must provide on a 1099-S? AThe gross proceeds of the sale BThe net proceeds of the sale CThe taxable proceeds of the sale DThe deductions attributable to the sale
The gross proceeds of the sale
Note: The purpose of IRS Form 1099-S is to ensure that the full amount of gross proceeds from sales are being reported to the IRS each year.
Jilian and Terence are married. They are selling their house. At closing, Sam the settlement agent, prepares a 1099-S that shows gross proceeds of $467,000. Must Sam file the 1099-S?
ASam does not need to file the 1099-S if he gets residence certificates from Jilian and Terence.
BSam must file the 1099-S, even though Jilian and Terrence probably won’t pay taxes on the sale.
CSam must file the 1099-S because Jilian and Terence owe taxes on the sale.
DSam does not need to file the 1099-S because you don’t need to file it unless the taxable proceeds exceed $500,000.
Sam does not need to file the 1099-S if he gets residence certificates from Jilian and Terence.
Note: According to the IRS, married couples are exempt from capital gains of up to $500,000 ($250,000 for singles) if they lived in the property as a primary residence for at least 2 out of the last 5 years.
Mortgage payments are typically paid…? AIn-arrears BUpfront CIn the future DOnce a year
In-arrears
Note: Mortgage payments are typically paid in-arrears, meaning in the past. For example, a May 1st mortgage payment will be for the month of April.
Assuming property taxes are paid in January of each year, who will receive a credit at closing for property taxes paid if the closing takes place on March 12th? AThe seller BThe buyer CBoth the seller and buyer DNeither the seller or buyer
The seller
A property is set to close on November 21st. If the seller collected $4,600 in rent on November 1st, how much will the buyer be credited at closing? A$1,380 (Dollars) B$3,220 (Dollars) C$154 (Dollars) D$4,600 (Dollars)
$1,380 (Dollars)
Note: The buyer will receive a credit for November 22nd to November 30th (9 days). 9 divided by 30 equals 0.30. 0.30 x $4,600 = $1,380.
Who maintains land records? AAll of the answer choices provided are correct BTown clerks CCounty recorders DCounty clerks
All of the answer choices provided are correct
Note: All of the answer choices maintain records, depending on the municipality.
The document that shows all of the receipts and disbursements handled by the closing attorney for the seller, and all money received in the transaction from the buyer, as well as the reason for and manner in which it was disbursed is the…? ASettlement statement BClosing document CReceipts and disbursements statement DAccounting statement
Settlement statement
Note: This question refers to the definition of a settlement statement.
Technically, RESPA applies to all “federally related mortgage loans.” As a practical matter, to what does RESPA apply?
AMost sales of one-to-four family residences
BAll real estate transactions
CEvery real estate transaction involving a mortgage
DReal estate sales involving cash
Most sales of one-to-four family residences
Note: RESPA applies to nearly all residential loans.
How many pages is a Closing Disclosure? AFive pages, as required by RESPA BAs many pages as it needs to be CThree pages, as required by RESPA DOne-third of a page
Five pages, as required by RESPA
Note: The Closing Disclosure is required under RESPA. The Closing Disclosure is a five-page form that provides final details about the mortgage loan. It includes the loan terms, projected monthly payments, and how much the borrower will pay in fees and other costs to get the mortgage (closing costs).
Hester is buying a house. While preparing for the sale, her lender pays for an appraisal. At a meeting, the lender mentions that the appraisal valued the house higher than expected. Hester wants to know more. What can she do?
AAsk the lender for a copy. The lender must provide a copy three days prior to closing.
BAsk the lender for a copy. Most lenders are willing to share the appraisals they pay for.
CAsk the lender for a copy. However, the lender is not required to disclose appraisals it pays for.
DOrder an appraisal of her own.
Ask the lender for a copy. The lender must provide a copy three days prior to closing.
Note: The borrower must receive a copy of the appraisal since they are technically paying for it. That being said, the lender will use the lesser of the purchase price or appraised value when determining their loan amount. Even if the appraisal came in high, the loan amount would remain the same.
A property is set to close on August 9th. How many days of interest will the buyer have to pay on their new loan at closing if their first mortgage payment is not due until October1st? A22 days B9 days C31 days D0 days
22 days
Note: The buyer’s October 1st mortgage payment will be for the month of September; however, they are still required to pay the loan interest for the remaining days in August. This will be paid by the buyer as pre-paid interest at the closing. Since they will be living in the house after the closing date, they must pay interest for the days between August 9th and September 1st.
Which is true about form 1099-S?
AIt only takes up a third of a page
BIt is three pages long and requires many disclosures
CThe filer must withhold taxes from the sale at the time of filing
DThe seller must file it
It only takes up a third of a page
Note: The 1099-S is a short document that only includes several lines of information, including the date of closing, the gross proceeds, the address, and the buyer’s part of the real estate tax.
Hector is buying a house from Rita with a closing in May. The settlement agent learns that city taxes have been paid in full through the date of closing. How should Samantha treat the city taxes on the Closing Disclosure?
AIgnore them. No action is required.
BCredit the seller and debit the buyer for city taxes prorated from closing to the end of the tax year.
CCredit the buyer and debit the seller for city taxes prorated from closing to the end of the year.
DCredit the seller for the water charges.
Ignore them. No action is required.
Note: Since the taxes have been paid through the closing date, no credits or debits need to be made.
Which of the following must come first at closing? ASigning the loan documents BPaying the real estate agent CPaying the seller DSigning the deed
Signing the loan documents
Eliot is buying a house. He asks Jenny to perform a title search. Jenny provides Eliot with a report that summarizes all the relevant events and documents she found in the land records. The report concludes, “Based on the evidence in the land records, the seller has and can convey marketable title.” What kind of report did Eliot receive? AAn attorney’s opinion of title BA title abstract CA guarantee of title DA title insurance policy
An attorney’s opinion of title
Note: Attorney’s opinion of title is a written statement by an attorney regarding the identity of all current title owners, lien holders, and possible claimants of a particular land.
Which participant’s interests align most closely with the buyer’s at closing? AThe lender BThe seller CThe settlement agent DThe title insurer
The lender
Note: Since the lender is giving a loan to the buyer, their interests are closely aligned. The lender will want to ensure the buyer is receiving clear title at closing.
Jilian is buying a house. By the day before closing, she has received a title opinion, an informational pamphlet, a loan estimate, and a closing disclosure. Which of these items does RESPA not require? AThe title opinion BThe informational pamphlet CThe loan estimate DThe closing disclosure
The title opinion
Note: The title opinion is not required. The loan estimate and closing disclosure are the two most important documents required by RESPA. The informational pamphlet is also required.
At closing, which must close first: the loan or the property? AThe loan BThe property CIt doesn’t matter which comes first DBoth simultaneously
The loan
Which of the following pays the seller a credit at closing for the remaining days left on their insurance policy?
AThe seller’s insurance company
BThe buyer
CThe seller’s attorney
DThe seller will not receive a credit from any party
The seller’s insurance company
Note: The insurance company will reimburse the seller at closing for the remaining days left on the insurance policy.
The FHA currently sets the housing expense ratio at…? A31 percent B35 percent C40 percent D45 percent
31 percent
Note: The maximum FHA housing expense ratio is set at 31%.
The FHA currently sets the debt-to-income ratio at…? A43 percent B35 percent C40 percent D45 percent
43 percent
Note: The maximum FHA debt-to-income ratio is set at 43%.
What is the monthly payment on a $450,000 loan with a mortgage factor of 4.2? A$1,890 (Dollars) B$1,320 (Dollars) C$1,760 (Dollars) D$3,980 (Dollars)
$1,890 (Dollars)
Note: To find the monthly mortgage payment using the mortgage factor, you must divide the loan amount by $1,000 and then multiply by the mortgage factor. $450,000 / $1,000 = $450. $450 x 4.2 = $1,890.
