Real Estate Practice Exam Part 3 Questions With Complete Solutions

Contract law requires earnest money be submitted with a contract of sale in the following amount - Answer: No earnest money is required to form a contract When a contract of sale is signed and the buyer's earnest money check is deposited in the special account, the money belongs to? - Nobody, until the transaction is either completed, rescinded, or breached In the listing agreement, the broker agrees to do his best to procure a buyer. This describes which of the following contract attributes? - Answer: Consideration All of the following events would terminate a listing agreement EXCEPT - Answer: a kitchen fire on the property A broker negotiated a sale at $400,000. The buyers need a mortgage of $360,000. The lender will approve only an 80% loan-to-value (LTV) mortgage. The broker prepares a fake second contract of sale with the purchase price of $450,000, has both parties sign - Answer: The broker, the buyers and the sellers are committing fraud. Sonny's mortgage loan is an amortizing loan. What does this mean? - Answer: Sonny's monthly payments include principal and interest Gail and Bobby have applied for a Federal Housing Administration (FHA) loan. The mortgage will be - Answer: insured by FHA through the Department of Housing and Urban Development (HUD) An agent sells another firm's listing for $950,000. The 7% commission is split 50/50 between the two companies. The agent received 60% of her broker's share. How much does she receive? - Answer: $19,950.00 Formula: House listing price x commission divided by 2 ( between two companies ) multiplied by percentage share from broker Andrew leased 4 apartments in the Langston Apartments for a total monthly rent of $4,500. If this figure represents an 8% annual return on Andrew's investment, what was the original cost of the property? - Answer: $675,000 Formula: monthly rent multiplied by 12 (annual) to get the annual rent. Divide the annual return by return percentage Capitalization of income attributable to real property is BEST defined as - Answer: present value of a property based upon its future benefits The Real Estate Settlement Procedures Act (RESPA) requires that a good faith estimate (GFE) of a borrower's closing costs be provided to the borrower - Answer: at the time of loan application or within three business days When Floyd and his wife bought a townhouse from his wife's parents, they received only a quitclaim deed. This was most likely because - Answer: it's the type of deed often used for in-family transactions