Rockwell Cram Exam #4 Test Bank 100% Verified
Tina is representing the buyers in a transaction; she described the property's
boundaries to her clients without clarifying that she was not sure that the boundaries
were exactly precise. The buyers, upon taking possession, built a fence along the
boundaries that she described, but the neighbors then filed suit because the fence didn't
follow the actual boundaries and encroached on their land. Can Tina be held liable for
misrepresentation? - ANSWER-Yes, because she reasonably knew that the described
boundaries might not have been correct
As a result of Federal Reserve action, interest rates for residential loans go down.
Which of the following is most likely to occur as a result? - ANSWER-There will be an
increase in sale prices for homes
One tax advantage of investing in real estate is: - ANSWER-sheltering of income
A property sold for $410,000. The seller has a mortgage outstanding, with a balance of
$170,000 that will need to be paid off. The seller owes his real estate agent a 6%
commission. The seller also agreed to pay 3% in discount points as a buydown, to help
the buyer receive a loan with a 95% LTV. Finally, the seller must pay another $8,000 in
closing costs. After all costs are paid, how much will the seller net? - ANSWER-
$195,715
Darren and Martin are agents for a large brokerage firm. They decide that Darren will
specialize in listing and selling houses on the north side of the river and Martin will
specialize in listing and selling houses on the south side of the river. Such a practice is:
- ANSWER-legal, because the prohibition against market allocation does not apply to
agents working for the same firm
Which of the following entities would participate in the primary market for mortgage
lending? - ANSWER-Commercial bank
One of the economic characteristics of real estate is: - ANSWER-scarcity
Milo is filing his federal income tax return. He can deduct: - ANSWER-the interest paid
on his mortgage
A contract gives a person the right to purchase property for a particular price within a
certain timeframe. This contract is a/an: - ANSWER-option
Of the following, which would have the greatest effect on the supply of real estate in a
particular market? - ANSWER-Size of labor force
Which of the following will terminate a lease? - ANSWER-Mutual agreement
, Sheila obtained a home loan from a commercial lender and paid for a mortgagee's title
policy. Who would this policy protect? - ANSWER-Only the lender
Under Title VIII of the Civil Rights Act of 1968, certain transactions are exempt. Which
one of the situations below would be exempted and not a violation of the act? -
ANSWER-An unlisted home that is for sale by owner, where the only advertising is a
sign in front of the property that reads simply "For Sale" and the owner owns only one
other home
Price fixing (including setting commission rates in a community) is prohibited by the: -
ANSWER-Sherman Antitrust Act and state antitrust laws
A federal law requires lenders to give a booklet about shopping for a home loan to all
prospective borrowers within three business days of loan application. What law is this? -
ANSWER-RESPA
Carl is housebound and never goes outside. Neighbor Salvador plants a vegetable
garden on a corner of Carl's property that is not visible from the main house. After the
required period of time, Salvador claims a prescriptive easement over this portion of
Carl's land. This easement is: - ANSWER-valid, because the use was open, and Carl's
knowledge of the use isn't considered
A seller complains that the seller's agent is showing other properties to buyers that
compete with the seller's property. Which of the following is true? - ANSWER-Seller's
agent is not breaching the duty of loyalty
When a borrower makes payments on a fully amortized loan, her debt service payments
will cover: - ANSWER-both principal and interest on the loan
An appraiser is trying to estimate depreciation when valuing an older residential rental
property, but is finding it difficult because no comparables have sold recently. However,
the appraiser can find sufficient data on rental rates in the same market, and a
capitalization rate can be supported. Which approach to value should the appraiser
use? - ANSWER-Income
Under which of the following circumstances would a listing be terminated? - ANSWER-
Seller dies
A property's net operating income is $12,000 per year. If an investor wants a 12% rate
of return, how much is the property worth to him? - ANSWER-$100,000
A brokerage manages a property. The property management records must be kept in: -
ANSWER-a location where the firm is licensed to have an office
A mortgage includes a prepayment penalty of 3% of the loan's balance at the time of
payoff, if the owner pays off the entire balance before a specified date. Monthly
amortized principal and interest payments are $1,484.40, with a 5% annual interest rate.
Tina is representing the buyers in a transaction; she described the property's
boundaries to her clients without clarifying that she was not sure that the boundaries
were exactly precise. The buyers, upon taking possession, built a fence along the
boundaries that she described, but the neighbors then filed suit because the fence didn't
follow the actual boundaries and encroached on their land. Can Tina be held liable for
misrepresentation? - ANSWER-Yes, because she reasonably knew that the described
boundaries might not have been correct
As a result of Federal Reserve action, interest rates for residential loans go down.
Which of the following is most likely to occur as a result? - ANSWER-There will be an
increase in sale prices for homes
One tax advantage of investing in real estate is: - ANSWER-sheltering of income
A property sold for $410,000. The seller has a mortgage outstanding, with a balance of
$170,000 that will need to be paid off. The seller owes his real estate agent a 6%
commission. The seller also agreed to pay 3% in discount points as a buydown, to help
the buyer receive a loan with a 95% LTV. Finally, the seller must pay another $8,000 in
closing costs. After all costs are paid, how much will the seller net? - ANSWER-
$195,715
Darren and Martin are agents for a large brokerage firm. They decide that Darren will
specialize in listing and selling houses on the north side of the river and Martin will
specialize in listing and selling houses on the south side of the river. Such a practice is:
- ANSWER-legal, because the prohibition against market allocation does not apply to
agents working for the same firm
Which of the following entities would participate in the primary market for mortgage
lending? - ANSWER-Commercial bank
One of the economic characteristics of real estate is: - ANSWER-scarcity
Milo is filing his federal income tax return. He can deduct: - ANSWER-the interest paid
on his mortgage
A contract gives a person the right to purchase property for a particular price within a
certain timeframe. This contract is a/an: - ANSWER-option
Of the following, which would have the greatest effect on the supply of real estate in a
particular market? - ANSWER-Size of labor force
Which of the following will terminate a lease? - ANSWER-Mutual agreement
, Sheila obtained a home loan from a commercial lender and paid for a mortgagee's title
policy. Who would this policy protect? - ANSWER-Only the lender
Under Title VIII of the Civil Rights Act of 1968, certain transactions are exempt. Which
one of the situations below would be exempted and not a violation of the act? -
ANSWER-An unlisted home that is for sale by owner, where the only advertising is a
sign in front of the property that reads simply "For Sale" and the owner owns only one
other home
Price fixing (including setting commission rates in a community) is prohibited by the: -
ANSWER-Sherman Antitrust Act and state antitrust laws
A federal law requires lenders to give a booklet about shopping for a home loan to all
prospective borrowers within three business days of loan application. What law is this? -
ANSWER-RESPA
Carl is housebound and never goes outside. Neighbor Salvador plants a vegetable
garden on a corner of Carl's property that is not visible from the main house. After the
required period of time, Salvador claims a prescriptive easement over this portion of
Carl's land. This easement is: - ANSWER-valid, because the use was open, and Carl's
knowledge of the use isn't considered
A seller complains that the seller's agent is showing other properties to buyers that
compete with the seller's property. Which of the following is true? - ANSWER-Seller's
agent is not breaching the duty of loyalty
When a borrower makes payments on a fully amortized loan, her debt service payments
will cover: - ANSWER-both principal and interest on the loan
An appraiser is trying to estimate depreciation when valuing an older residential rental
property, but is finding it difficult because no comparables have sold recently. However,
the appraiser can find sufficient data on rental rates in the same market, and a
capitalization rate can be supported. Which approach to value should the appraiser
use? - ANSWER-Income
Under which of the following circumstances would a listing be terminated? - ANSWER-
Seller dies
A property's net operating income is $12,000 per year. If an investor wants a 12% rate
of return, how much is the property worth to him? - ANSWER-$100,000
A brokerage manages a property. The property management records must be kept in: -
ANSWER-a location where the firm is licensed to have an office
A mortgage includes a prepayment penalty of 3% of the loan's balance at the time of
payoff, if the owner pays off the entire balance before a specified date. Monthly
amortized principal and interest payments are $1,484.40, with a 5% annual interest rate.
