PSI Exams Online Real Estate National Questions and Complete Solutions Graded A+

PSI Exams Online Real Estate National Questions and Complete Solutions Graded A+ Two lots of the same size are sold on a street. The lot on the corner sells for $20,000 more then the lot in the middle of the street. Which of the following characteristics MOST likely explains the price difference? - Answer: Stitus At the time of harvest, crops that require annual planting are generally considered to be? - Answer: Personal Property A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a foreclosure auction to a speculating investor for $88,000. Assume that all cost of the foreclosure sale are included in these balances. Which of the following statements are false regarding the distribution of funds? - Answer: The second mortgage receives nothing unless he forced the foreclosure auction. A tenant rented an apartment, signing a 15 month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have? - Answer: Tenancy at Will Timeshare ownership programs MOST often use what ownership forms? - Answer: Tenancy in Common The land description T3N, R4W Principal Meridian refers to what method of property description? - Answer: Rectangular Survey A homeowner has negotiated with a neighbor to obtain the permanent right o pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement - Answer: Appurtenant Although states make specific laws governing water rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with the property, or all water rights are controlled by the state under the doctrine of prior appropriation. This doctrine is MOST likely to be followed in states where? - Answer: Water is Scarce A deed restriction is applicable to the activities of? - Answer: All Owners, Present and Future If conditions for purchase are included in a deed and these conditions are violated, what is the penalty? - Answer: Return of the Property to the Original Owner The 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? - Answer: Escheat A lawsuit for inverse condemnation may be brought by? - Answer: A Homeowner An Environmental Impact Statement ? - Answer: Projects the Impact on the Environment of a Proposed Project. Which of the following BEST illustrates the concept and intent of a buffer zone? - Answer: Garden Apartments Located Between a Single-Family Residential Neighborhood and a Shopping Center _______________ method DOES NOT calculate the reproduction or replacement cost of building. - Answer: Straight-Line Method 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? - Answer: The First Sold Which rule-of-thumb version is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? - Answer: GRM An appraiser MUST be licenses or certified to handle Federally related work on residential property valued at more than? - Answer: $250,000 A comparative market analysis is MOST often used for? - Answer: Setting a Listing Price A formal appraisal will ALWAYS be REQUIRED when the - Answer: Lender Wants to sell the Mortgage to the Secondary Market. When preparing a market data estimate value, which categories of adjustment is NOT essential? - Answer: The Original Cost of the Building When is flood insurance REQUIRED in order to obtain a loan? - Answer: When the Property is Located in a Flood Hazard Zone. The FHA functions MOST like? - Answer: A Insurance Company Discount Points are computed as a percentage of the selling price. True or False? - Answer: False Which Federal law regulates the advertisement of a lender's credit? - Answer: Regulation Z An adjustable rate loan DOES NOT included this element? - Answer: Negative Amortization A borrower as defaulted on the mortgage. The mortgage contains a acceleration clause. This permits the lender to? - Answer: Demand Immediate Payment of the Entire Note. The purpose of usury laws is to regulate? - Answer: Interest Rates Charged by Lenders In helping a buyer 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 EXCEPT for? - Answer: More Variety of Loan Programs Available A broker says, while showing a rural property, "This property has the worlds purest well water." This is a example of? - Answer: A Expression of Opinion, or Puffing, which can Lead to Misrepresentation. A agent shows a home to a couple and mentions that it has a lovely fireplace in the living room. After buying the home, the buyers and agent discover that the brick fireplace is just decorative and is not "wood burning." What would be the BEST protection for the agent from financial loss? - Answer: E & O Coverage A buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyers agent who is drawing up the contract should? - Answer: Suggest the Buyer Ask a Lawyer to Furnish the Wording. A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as? - Answer: Steering A managing broker can be held responsible for? - Answer: All Real Estate Activities of Salesperson. If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what is the net income needed each month? - Answer: $1,150. 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 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) - Answer: $409.20 The sellers have agreed to give the buyer a carpet allowance to replace the family room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard for pad and installation. If the family room is 22'6"X15', how much will it cost the sellers? (to the nearest cent)? - Answer: $935.63 On January 15, a seller paid $960 in annual property tax for the current calendar year. A buyer purchasing the house with the closing set for March 1. What will be the sellers credit for the property taxes already paid if the buyer pays for the day of closing? (Use a 360-day year and 30-day month.) - Answer: $800 A salesperson list a property with a contract that allows for sub agency and dual agency. The salesperson is - Answer: An Agent to the Broker and a Sub Agent to the Principal. The day after a broker's listing 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? - Answer: He is No Longer the Listing Agent. 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. What describes this relationship? - Answer: Agency Coupled with an Interest. A broker has brought a ready, willing and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when? - Answer: The Seller Accepts the Offer. An agency relationship between a property owner and a property manager is usually created by? - Answer: A Management Agreement In a exclusive right-to-sell listing, an owner list the property for sale with how many brokers - Answer: One When a principal authorizes an agent to preform a particular act or transaction, it is a example of? - Answer: Special Agency One common method for controlling the problems created by conflict of interest in dual representation is? - Answer: Allowing a Broker to Designate Separate Salespeople within the Company as Legal Representatives of each Clients. The relationship in which the agent id placed in the position of trust and confidence to the principal is known by the term? - Answer: Fiduciary The amount of commission to be paid is? - Answer: Agreed upon by the Seller and Agent on the Contract. A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should? - Answer: Tell the Seller to Disclose the Termite Treatment on the Property Disclosure. 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? - Answer: Require the Buyer to Acknowledge Disclosure of the Presence of any Known Lead Paint. The real estate broker who is listing a house for sale should personally verify? - Answer: The Number of Square Feet in the Building. At the time of the listing, the seller tells the listing agent they are moving because the neighbor has loud parties every weekend. The agent should? - Answer: Tell Potential Buyers about the Parties. What is the first action to take when mold problems are found? - Answer: Identify and Remedy the Cause of the Problems. The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of? - Answer: Impossibility of Performance A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all the kitchen appliances in the sale, and this fact was included in the sales contact. In this situation, if the seller takes the appliances with him, what recourse does the buyer have? - Answer: The Buyer may Sue the Seller for Specific Performance 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? - Answer: The Person Appointed by the Court to act for the Disabled Person must Contract on His/Her Behalf. The escrow officer or closing agent MUST give information regarding the sales price and seller's social security number to? - Answer: IRS. At closing on June 15, the buyer is assuming mortgage presently on the property, on which the monthly interest charge is $600. The seller has made the payment on June 1. Assuming a VA mortgage, what is the adjustment made at closing? - Answer: Debit to Seller $300; Credit to Buyer $300 A judgment as been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given? - Answer: Constructive Notice Under land contract for deed, who retains fee ownership of the property? - Answer: Vendor Antitrust laws prohibit competing brokers except from? - Answer: Receiving Compensation from Both Buyer and the Seller A single parent of two preschool children makes a application to rent a condo intended for older persons that is 90% occupied by people over the age of 55. In this case, the Federal Housing Act protects the? - Answer: Condo Owner from being forced to Rent to the Family Because f the Age of Over 80% of the occupants of the development. Prima Facie evidence of discrimination by a broker? - Answer: Failure to Display the Equal Housing Opportunity Poster at the Broker's Place of Business. According to the Truth-In-Lending Act, if any "Trigger Terms" are used in an ad, disclosure MUST appear in the ad, EXCEPT the? - Answer: Prepayment Penalties and Rebates Earnest money should be deposited into a trust account? - Answer: In a Timely Manner, According to State Laws. Prospective buyers made an offer on a property. The seller did NOT accept but made a counter offer. The prospective buyers signed he counteroffer and the real estate agent delivered their acceptance to the seller. In interim, the same buyers had found another house that they like better and made a offer on it, which was accepted. what is a true statement? - Answer: Both Contracts are Valid. A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called? - Answer: A Contract. An agreement to purchase that has NOT yet closed is? - Answer: An Executory Contract A couple signed a lease on an apartment for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather then to renew it. How much notice MUST they give to comply with the lease term? - Answer: No Notice is Required A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if? - Answer: The Owner Withdraws the Counteroffer Before it's Accepted The purpose of requiring an earnest money deposits in a real estate contract is to? - Answer: Provide Evidence of the Buyer's Intention to Carry out the Contract. A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called? - Answer: An Option Contract The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing? - Answer: Credit to Buyer $110,000; Debit to seller $110,000 A will has been dawn up leaving the family homestead to the owners' granddaughter. Once that has been done, the owners may? - Answer: Make Any Changes they wish through s Codicil or a Later Will. Depreciation is calculated based on the? - Answer: Cost of the Building Only A lender will make a 80% loan-to-value on a property that is appraised for $72,250. How much can the purchaser borrow? - Answer: $57,800 A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which owner would MOST likely prefer a property manager who emphasizes e of value over profitability? - Answer: The Department of Housing and Urban Development. A major reason for buying and owning a condominium rather then a detached single-family home is that? - Answer: A Condominium Tends to be More Affordable Ownership of common stock in a corporation gives? - Answer: An Interest that is Classified as Personal Property A couple are 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? - Answer: Month-to-Month Lease Delinquent payment is grounds for sale of the property in BOTH special assessments and ad valorem taxes? True/False - Answer: True A homeowner is willing to let his neighbor park his RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move in next door in the future. What should he give his neighbor? - Answer: A License Legal descriptions using the government survey system are NOT generally used in? - Answer: Original 13 States The power vested in the government to establish legislation to preserve order. protect the public health and safety, and promote the general welfare is known as? - Answer: Police Power Regulation Z addresses all issues EXCEPT? - Answer: Usury A broker, acting as a agent for the seller, presents a offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should? - Answer: Tell the Seller that the Buyer will Pay More. Another term for the owner of a property listed with your firm is the? - Answer: Client A broker lists a property, with a listing contract allowing sub agency and dual agency. One of the broker's salespersons shows the property. The salesperson would be classified as? - Answer: A Subagent of the Seller. A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act, who is liable for the damages from dumping prior to the sale of the property? - Answer: Seller. Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it's determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of? - Answer: Misrepresentation When one of the parties to an agreement fails to preform one of its conditions, that contract is deemed to be? - Answer: Breached When is racial discrimination in the rental of rooms or apartments permitted? - Answer: Under No Circumstance Why was Jones V. Mayer decision of 1968 important? - Answer: By Upholding the Civil Rights Act of 1866, the Supreme Court Removed all Exceptions to Racial Discrimination in Housing. On February 1st, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1st. What will be the seller's credit for the property taxes already paid if he buyer pays for the day of closing. (Use 360-day year and a 30-day month) - Answer: None of the Above Davis, Matt and Cale are vested as tenants in common on a parcel of land. Each received a pro-rata undivided interest in the parcel. the total price $120,000. Davis put up 40% and Matt put up $22,500. What percentage does Cale own? - Answer: 58% Two buyers bought a house with a $178,000 mortgage. The interest rate is 6 1/2% per annum payable for 30 years. to the nearest dollar, what is their monthly principal and interest payment? (BE SURE TO USE THE AMORTRIZATION TABLE.) - Answer: $1,125 A buyer made a offer on a property that was listed at $350,000. She wanted to put $35,000 down and make payments to the seller, allowing the seller to retain title until the principal was paid off. The seller accepted, and the buyer became a? - Answer: Vendee A loan which requires the borrower to pay interest only until the maturity date (or due date), and then to pay the entire principal on the maturity date, is called? - Answer: Term Loan