Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
REAL ESTATE
NATIONAL PRACTICE EXAM 3
| Term | Definition |
|---|---|
| All of the following are examples of a property manager's duties EXCEPT | accepting a rebate from a service provider. |
| The market value of a parcel of real estate is | the most probable price it should bring. An appraisal estimates the market value—the price a property would most probably bring. |
| All of the following are true of the government's police power EXCEPT | that it sets private controls in certain subdivisions on the types of floor plans, fencing, and house colors. |
| In the cost approach, an appraiser uses which of the following? | an estimate of the building's replacement cost. The building's replacement cost is an essential component of the cost approach, along with depreciation and land value |
| A sales associate was paid $2,500, which was half of the 7% that the brokerage collected. What was the sale price of the property? | $2,500 × 2 = $5,000 $5,000 ÷ 7% (.07) = $71,428.57 round to $71,429 |
| In the cost approach to value, the appraiser makes use of | the estimated replacement cost of the building. The cost approach is used to estimate the replacement or reproduction cost of the building. |
| Prop owner of a 10-building complex has told the prop mgt co that building by playground to only to families, buildings by lots to singles or couples w/o children, + over 50 be offered first-floor. May the prop mgr follow the orders of the owner? | no, as the request is in violation of fair housing laws. Under fair housing law, the owner's request would be considered steering. |
| After closing expenses of $550 and a 6% commission was paid, the seller received a check for $149,850. What was the sale price of the property? | 100% – 6% = 94% $149,850 + $550 = $150,400 (needed before commission) $150,400 ÷ 94% (.94) = $160,000. |
| In a land contract, the buyer | has possession during the term of the contract. In a land (installment) contract, the buyer has possession of the property during the term of the contract. |
| A property that has an undesirable reputation because of an event that has occurred on or near the property is | a stigmatized property. A property that has been the site of an event such as a suicide, murder, or other undesirable event is known as a stigmatized property |
| The primary purpose of a deed is to | transfer title rights. Title is the right to or the ownership of land. A deed is the document by which the owner transfers the title to real property. |
| Residential leases are usually expressed as | a monthly rate per unit. Residential leases are for an apartment or home and are expressed in a per unit rate. |
| To determine the kinds of land uses and the amounts of land for each use in a subdivision, a developer must consider | the master plan of the local government. A master plan (or comprehensive plan) created by a local government usually covers land use, housing needs, community facilities, utilities, and energy conservation |
| A seller discovered radon and has sealed the cracks in the foundation and told the listing broker that he feels sure the problem is solved. The listing broker should do which of the following? | disclose the radon issue to all potential buyers. The discovery of radon is a material fact that may affect a purchaser's decision to buy the house. |
| listing price of a prop was $135k. Buyer made an offer of 90% of the listing price, was accepted by the sellers. The prop appraised for offer price and buyers secured an 85% loan at 9% int for 30 years. How much interest will be paid in the first payment? | $135,000 × 90% (.90) = $121,500 Sales price $121,500 × 85% (.85) = $103,275 Loan amount $103,275 × 9% (.09) = $9,294.75 Annual interest $9,294.75 ÷ 12 = $774.56 |
| The term of a loan is | the length of time the borrower has to repay the loan. For residential loans, a borrower generally negotiates with the lender a term of 15–30 years |
| Which statement about encumbrances on real estate is TRUE? | easements and encroachments are always encumbrances on real property. An encumbrance is a charge or claim that attaches to real property and lessens its value or impairs its use |
| All of the following are examples of due diligence in a purchase contract EXCEPT | broker completes a comparative marketing analysis for a listing appointment. The broker is using due diligence, but for a listing, not the purchase contract. Due diligence is all parties to the transaction working in good faith to close. |
| A purchaser borrowed $85,000, to be repaid in monthly installments of $530.20 at 7% annual interest. How much of the borrower's first month's payment was applied to reducing the principal amount of the loan? | (1) (Rate × Principal = Interest) 7% (.07) × $85,000 = $5,950 (2) $5,950 ÷ 12 = $495.83 (3) $530.20 – $495.83 = $34.37 |
| Couple ask to see prop listed w/another broker. Salesperson calls agent + makes an appt to how the prop. W/o the couple sig, He also tells the couple, he knows the owners are getting divorce+ want to sell quickly. In this case, the salesperson has created | an implied agency relationship with the buyers. The salesperson has unintentionally created an agency relationship with the buyers. |
| Personal property includes all of the following EXCEPT | a custom built-in bookcase. The key word is built-in; since the bookcase is attached, it is real property. Chairs, emblements, and trade fixtures are all examples of personal property. |
| The buyers secured an $82,000 loan at 9.25% interest for 30 years. Their monthly payment is $674.59. How much of their first payment will be applied to the principal balance? | $82,000 × 9.25% (.0925) = $7,585 Annual interest $7,585 ÷ 12 = $632.08 Monthly interest $674.59 – $632.08 = $42.51 |
| The principal difference between an estate for years and an estate from period to period is that | an estate from period to period has no expiration date. An estate from period to period, or periodic tenancy, does not have a specific expiration date, as it automatically renews until notice is given by the tenant or landlord. |
| Hidden defects, which are not easily discovered during a property inspection, are called | latent defects. A latent defect is a hidden structural defect that is not easily discovered during a property inspection. |
| All of the following are true about contingencies EXCEPT | they must be worded loosely to allow reasonable satisfaction. Contingencies create a voidable contract; if the contingencies are rejected or not satisfied, the contract is void. |
| The primary survey line running east and west in the rectangular survey system is | base line. The base lines run east and west in a rectangular survey system, while the principal meridians run north and south. |
| Lead would likely to be found in all of the following EXCEPT | insulation. Insulation does not use substances which contain lead, so it is unlikely to contain lead material. |
| Real estate law governing advertising applies to all of the following EXCEPT | in-house notes for showing. In-house notes for showing are not to be seen by consumers so do not have to follow state or federal laws. |
| At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil was firm enough to support the construction of a building when, in fact, the seller knew it was not. This contract is | voidable by the buyer because of fraud. The contract is voidable because it contains all the essential elements of a contract but could be rescinded due to fraud by the seller |
| When the supply decreases while demand remains the same, | price tends to rise. Under the laws of supply and demand, if supply of a commodity decreases with demand remaining the same or increasing, the price of a commodity increases. |
| A section in the rectangular survey system contains | 640 acres per section. Each township contains 36 sections, and each section is one square mile, or 640 acres per section. |
| The amount of commission that is paid to a salesperson is determined by | mutual agreement with her broker. All commissions must be paid through the broker, and the amount the salesperson receives is set by mutual agreement between these two parties. |
| All of the following clauses in a loan agreement enable the lender to demand that the entire remaining debt be paid immediately EXCEPT | a defeasance clause. A defeasance clause requires the lender to execute a satisfaction of the loan when the loan has been fully paid. |
| An optionee has communicated to the optionor that the optionee will purchase the property. This option contract is now exercised and is BEST described as | an executory bilateral purchase contract. When the buyer informs the seller that he is going to purchase the property, the option is exercised, and an executory bilateral purchase contract exists. |
| All of the following provisions would typically be included in a property management agreement EXCEPT | authorization for the manager to receive referral fees from service providers. Management agreements do not authorize managers to receive referrals or kickbacks from service providers. |
| An agent forgot to get the buyer to sign the offer. What is the status of the offer? | void. The offer is missing an essential element and is void. Duress, fraud, misrepresentation, and minors always make contracts voidable. A contract that is binding and enforceable is valid. |
| The owners of the smaller model of houses in the neighborhood may find that the values of their homes are affected by what principle? | progression. Under the principle of progression, the smaller homes in an area with larger homes will have their value increased. |
| An appraiser has been hired to prepare an appraisal on a property that includes an elegant old mansion that is now used entirely as an insurance company office. Which approach to value would the appraiser MOST rely on? | income approach. The income approach is the most appropriate approach for income-producing properties such as an office building, even if the building was once a residence. |
| A married couple owns a farm together with the right of survivorship. Their ownership is MOST likely | tenancy by the entirety. A married couple, in certain states, may use a special form of co-ownership called tenancy by the entirety. |
| A radioactive, odorless gas which may build up inside buildings is | radon. Radon is an odorless, radioactive gas that can build up in basements and crawl spaces and move to upper floors. |
| Which of the following would be classified as external depreciation? | poorly maintained properties in the neighborhood. External depreciation is caused by factors not on the subject property, such as poorly maintained properties in the neighborhood. |
| How many cubic yards of concrete must a builder buy to pour a sidewalk that measures 45' × 3.25' and is five inches thick? | 5'' ÷ 12'' = .4167' 45' × 3.25' × .4167' = 60.9423 cubic ft. 60.9423 ÷ 27 = 2.2571 cubic yds. |
| The seller's property disclosure form yields which of the following benefits for the transaction? | it gives the buyer full knowledge of all issues with the property. The seller's property disclosure does not act as an inspection and gives the buyer full knowledge of the seller's representation of the issues asked on the form |
| Broker lists her neighbor's home for $212k. Same day, a buyer in the community asks for info on housesit $180k–$225k. Broker offers to rep the buyer, but refuses rep by her co at this time. Based on these facts, which of the following statements is TRUE? | The neighbor is the broker’s client, and the buyer is the broker’s customer. |
| A contract for the sale of real estate that does not state the consideration and provides no basis on which the consideration could be determined is considered | void. Consideration is an essential element of a real estate contract, along with competent parties, meeting of the minds, lawful objective, and in writing. |
| Which statement BEST identifies the meaning of the term novation? | substitution of a new contract for an existing one. Novation is a new contract that replaces the original. Rescission is the return of all parties to their condition prior to the contract, and lis pendens is a notice of a pending lawsuit. |
| In receiving a gift of a parcel of real estate, one of the two new owners was given an undivided 60% share, and the other received an undivided 40% share. They now hold title as | tenants in common. Tenants in common hold property with undivided fractional interests, and the shares do not have to be equal. In a joint tenancy, each owner holds equal shares and interests to the property. |
| Asbestos, sick building syndrome, and lead-based paint are all examples of issues beyond the scope of | environmental concerns that a property manager may have to address |
| The priority of liens refers to which of the following? | the order in which liens will be paid if property is sold to satisfy a debt. The priority of liens refers to the order in which claims against the property will be paid off. |
| A bachelor died owning real estate that he devised to his niece. When will full title and possession pass to his niece? | after his will has been probated. The niece is regarded as the owner immediately upon the testator's death, but she will not receive possession (as a devisee) until probate proceedings are complete. |
| Unless the lease agreement stipulates otherwise, the upkeep of the electrical, heating, and plumbing systems would be the responsibility of | the owner/lessor. The owner is the lessor and responsible for the upkeep of the property unless the lease states different. The tenant is the lessee. |
| What capitalization rate is indicated by a property producing $10,000 annual net operating income (NOI) for which an investor paid $105,263? | $10,000 (annual NOI) ÷ $105,263 (purchase price) = 9.5% (.095) the capitalization rate |
| What is the intent of seller disclosures regarding property conditions? | helps the buyer determine what price to offer. After consulting the property disclosure to learn about potential problems, the age of appliances, and systems, the buyer is in a better position to make an offer based on the condition of the property. |
| A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of | patent defect. A patent defect is easily visible when inspecting a property. |
| Defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to the normal wear and tear on a property is called | physical deterioration. Physical deterioration is the loss of value based on the physical wear and tear on the property. It can be either curable or incurable deterioration. |
| A lessee who pays some or all of the landlord's property expenses has | a net lease. With a net lease, the tenant pays a base rent plus certain costs in the operation of the property, such as utilities, property taxes, and assessments. |
| Zoning ordinances normally define specific uses for land that are permitted within a municipality. All of the following are land uses traditionally classified in such ordinances EXCEPT | rental. Zoning ordinances have traditionally classified land-use into residential, commercial, industrial, and agricultural and do not include rental as one of the classifications. |
| The type of mortgage loan that uses both real and personal property as security is | a package loan. A package loan includes not only the real estate, but also all personal property and appliances installed on the premises. |
| A salesperson working with a commercial client for the first time follows the client's orders and drafts a contract for the purchase of a small strip center. Which of the following is TRUE? | the salesperson is illegally practicing law and is most likely not competent. Real estate professionals are not allowed to practice law, and drafting contracts comes under that practice. |
| Good faith as applied to agency is BEST defined as | using honest and sincere intentions. All parties to a contract are to use their best good-faith effort to fulfill the contract. Putting a principal's interest above an agent's is loyalty. |
| Normally, a deed will be considered valid even if | signed by the attorney-in-fact of the grantor. The attorney-in-fact must act under a power of attorney—the specific written authority to execute and sign for another person. |
| An amendment to a contract is created | by adding provisions to an accepted contract. An addendum is a change to an original contract. An amendment is created to make changes or to add provisions after the original contract is created. |
| The buyer has made an offer to the seller, who has countered and given the buyer 24 hours to accept the counter. In this case, the original offer is considered to be | terminated. A counteroffer terminates the original offer and creates a new offer. Since there is no contract, the terms are executory. An offer is not a contract and cannot be considered voidable or void. |
| It is illegal for a lending institution to refuse to make a residential real estate loan in a particular area only because of | the physical location of the property. Refusing to make a residential loan in a particular area is known as redlining, literally drawing a line around particular areas and refusing to make loans in those areas. |
| A purchaser is qualified to obtain an FHA loan for his new home. Which of the following would he apply to? | an FHA lender. The FHA does not negotiate loans. The FHA insures loans, which means the loan is backed by the government. |
| Errors and omissions (E&O) insurance will typically cover claims based on | innocent mistakes, such as burglary after failure to lock the door after a showing. E&O insurance generally covers procedural errors, such as forgetting to lock the back door that then facilitated a burglary. |
| Broker learns that neighbor wishes to sell his house. Broker knows the prop well and is able to persuade a buyer to make an offer. Broker then asks the neighbor if she can present the offer, and the neighbor agrees. At this point, which statement is TRUE? | the neighbor is not obligated to pay the broker a commission. The broker procured a buyer for the property on the basis of an oral agreement with her neighbor, the seller. |
| Antitrust laws prohibit all of the following EXCEPT | a broker independently setting a company commission schedule. All the other actions are violations of antitrust laws. |
| A buyer's broker, whose commission is shared via the multiple listing service, states that the commission that will be paid by the seller to the listing broker in a real estate purchase | remains the agent of the buyer. The source of compensation for a broker is not the factor that determines agency relationship. |
| An example of functional obsolescence is | a five-bedroom home with one bathroom. Obsolescence is a loss of value. Functional obsolescence results from outmoded or unacceptable physical features in a property. |
| In an offer, a buyer requested freestanding bookcase and the installed hot tub with the prop. Negotiations went back and forth, and the buyer's agent finally wrote a new offer that failed to mention either item. At closing, the buyer should expect to have | the hot tub remain and the bookcase removed by the seller. The hot tub, which is a fixture, would have to be excluded from the contract if the seller was going to keep it. |
| A step used in the income approach to determine value is to | apply the capitalization rate. In the income approach to value, the capitalization rate is applied to the property's annual net operating income to arrive at the estimate of the property's value. |
| A buyer agrees to buy a property and then changes his mind. The seller in this agreement has no recourse against the buyer. The contract was | an option. In an option contract, the seller's only recourse is to retain the option money. |
| All the following clauses in a loan agreement enable the lender to demand the entire remaining debt be paid immediately EXCEPT | a defeasance clause. A defeasance clause requires a lender to execute a satisfaction when the note has been fully paid. |
| To determine whether a location can be put to future use as a retail store, you would examine | the zoning ordinances or regulations. Zoning ordinances regulate how properties in various parts of a jurisdiction may be used. |
| Apt lease includes a clause that prohibits owning a pet.Tenant buys cat and doesn't remove cat even after written reminder of the lease. Tenant refuses, saying cat is small and will cause no damage. Landlord decides to remove the tenant. Legal process is | is actual eviction. A tenant's breach of a lease can result in a court action known as actual or judicial eviction. |
| Charging more interest than is legally allowed is | usury. Usury is charging more interest on a loan than permitted by law. Escheat is the reversion of property to a state or county in cases where a property owner dies intestate with no eligible heirs. |
| The following legal description contains how many acres: the S½ of the SE¼ of the NW¼ of the NE¼ of Section 7? | multiply all denominators: 2 × 4 × 4 × 4 = 128. Then divide 640 by 128: 640 (acres in a section) ÷ 128 = 5 acres. |
| Reconciliation is BEST described as | analyzing the findings obtained from the three approaches to value. Reconciliation is analyzing the findings obtained from the three approaches to value and deciding how much weight to give to each approach. |
| The authority of the landlord to carry out the eviction of a delinquent tenant from rented property comes from | the court. Actual or judicial eviction gives the landlord the right to regain possession through a legal process when a tenant breaches a lease or improperly retains leased premises |
Created by:
vtlove116
Popular Real Estate sets