Real Estate - AYPO practice final exam
Questions and Answers
*a real estate agent walked through a client's house. he noted 4 things: side yard is not
maintained, lock on back door doesn't effectively latch, support beams in the basement are
discolored and has some cracks, and some of the linoleum tiles in the kitchen are loose.
Which of these items should he suggest to be professionally inspected? - -the support
beams in the basement
-*if the total cost of the loan is paid off in a set of scheduled payments across the term, the
loan is... - -fully amortized
-in order for a deed to be legal, it must: - -be recorded with the county clerk
-*does the real estate settlement procedures act allow the receiving of unearned fees for
services not actually preformed? - -no
-what is the purpose of mortgage insurance - -to reimburse a lender should a borrower
default on a mortgage loan
-what is the primary purpose of regular reconciliation on clients' trust accounts? - -to
catch problems when they are small
-what kind of contract is an option? - -a unilateral contract
-discount points - -a fee that reduces the interest rate on a mortgage loan
-*carol takes out a second mortgage on her house. what should the bank issuing the second
mortgage do if they want to give their lien preferential weight over any other liens that may
be imposed on carol's property? - -perfect the lien from the second mortgage
-what is the official legal term in Michigan for listing or buyer agency agreement that est.
an agency relationship between a real estate broker and a client? - -service provision
agreement
-equitable remedy - -reformation
-CC&Rs in real estate stands for: - -covenants, conditions, and restrictions
-*if the demand for a product remains relatively the same, what is the best way to increase
the value of that product? - -decrease the supply of that product
-comprehensive long-range plan intended to guide growth and development of a
community or region? - -a master plan
, -who reviews the form and content of the real estate exam? - -both the department of
licensing and regulations and the board of real estate brokers and salespersons
-what type of agency is likely in a power of attorney arrangement? - -universal
-*a property owner is considering "buying" discount points for a $65,000 second mortgage
with a 30 year term. This will lower annual interest rates from 10.5% to 9.5%. Is the total
cost of the second mortgage greater with the 10.5% annual interest rate or with the 9.5%
rate and the added cost of the points? - -greater total cost at 10.5% interest ($214,110)
-*if a real estate professional intentionally fails to disclose a conflict of interest to a party
they are representing in a real estate transaction, the real estate professional could be
accused of... - -committing fraud
-according to the regulations est. by the Michigan department of insurance and financial
services in response to the passage of the Dodd-Frank and the SAFE act, in order to use a
land contract to finance the purchase of a property, the person must be able to... - -qualify
for a traditional mortgage loan
-the current transfer tax rate in Michigan is... - -$3.75 per $500 of the total property value
-how can a short sale be advantageous for a lender? - -the short sale pays off some of the
debt and avoids the extra costs associated with foreclosure processdings
-*a property was purchased for $350,000. Since then, the property has appreciated a total
of $75,000 in value. the owner also built a $26,000 structure on the property. now the
property is being sold and the seller owes transfer taxes. if the transfer tax rate is $10 for
every $5,000 of the adjusted tax basis, how much does the seller owe in transfer taxes?
(purchase price + improvement value + total accumulated appreciation adjusted tax basis)
(adjusted tax basis x tax rate = transfer taxes) - -$902
-property taxes are considered which type of taxes? - -ad-valorem taxes
-which of the following is NOT true about acceptance of a contract? - -rejection of a
counteroffer reinstates the previous offer
-a breach of contract that substantially lowers the value of the contract for the non-
breaching party is considered to be... - -a material breach
-*which of the following is NOT a material fact related to the property's condition? - -the
existence of easements on the property
-*what is the purpose of a promissory note in a real estate mortgage agreement? - -the
promissory note is what requires the borrower to repay the loan
Questions and Answers
*a real estate agent walked through a client's house. he noted 4 things: side yard is not
maintained, lock on back door doesn't effectively latch, support beams in the basement are
discolored and has some cracks, and some of the linoleum tiles in the kitchen are loose.
Which of these items should he suggest to be professionally inspected? - -the support
beams in the basement
-*if the total cost of the loan is paid off in a set of scheduled payments across the term, the
loan is... - -fully amortized
-in order for a deed to be legal, it must: - -be recorded with the county clerk
-*does the real estate settlement procedures act allow the receiving of unearned fees for
services not actually preformed? - -no
-what is the purpose of mortgage insurance - -to reimburse a lender should a borrower
default on a mortgage loan
-what is the primary purpose of regular reconciliation on clients' trust accounts? - -to
catch problems when they are small
-what kind of contract is an option? - -a unilateral contract
-discount points - -a fee that reduces the interest rate on a mortgage loan
-*carol takes out a second mortgage on her house. what should the bank issuing the second
mortgage do if they want to give their lien preferential weight over any other liens that may
be imposed on carol's property? - -perfect the lien from the second mortgage
-what is the official legal term in Michigan for listing or buyer agency agreement that est.
an agency relationship between a real estate broker and a client? - -service provision
agreement
-equitable remedy - -reformation
-CC&Rs in real estate stands for: - -covenants, conditions, and restrictions
-*if the demand for a product remains relatively the same, what is the best way to increase
the value of that product? - -decrease the supply of that product
-comprehensive long-range plan intended to guide growth and development of a
community or region? - -a master plan
, -who reviews the form and content of the real estate exam? - -both the department of
licensing and regulations and the board of real estate brokers and salespersons
-what type of agency is likely in a power of attorney arrangement? - -universal
-*a property owner is considering "buying" discount points for a $65,000 second mortgage
with a 30 year term. This will lower annual interest rates from 10.5% to 9.5%. Is the total
cost of the second mortgage greater with the 10.5% annual interest rate or with the 9.5%
rate and the added cost of the points? - -greater total cost at 10.5% interest ($214,110)
-*if a real estate professional intentionally fails to disclose a conflict of interest to a party
they are representing in a real estate transaction, the real estate professional could be
accused of... - -committing fraud
-according to the regulations est. by the Michigan department of insurance and financial
services in response to the passage of the Dodd-Frank and the SAFE act, in order to use a
land contract to finance the purchase of a property, the person must be able to... - -qualify
for a traditional mortgage loan
-the current transfer tax rate in Michigan is... - -$3.75 per $500 of the total property value
-how can a short sale be advantageous for a lender? - -the short sale pays off some of the
debt and avoids the extra costs associated with foreclosure processdings
-*a property was purchased for $350,000. Since then, the property has appreciated a total
of $75,000 in value. the owner also built a $26,000 structure on the property. now the
property is being sold and the seller owes transfer taxes. if the transfer tax rate is $10 for
every $5,000 of the adjusted tax basis, how much does the seller owe in transfer taxes?
(purchase price + improvement value + total accumulated appreciation adjusted tax basis)
(adjusted tax basis x tax rate = transfer taxes) - -$902
-property taxes are considered which type of taxes? - -ad-valorem taxes
-which of the following is NOT true about acceptance of a contract? - -rejection of a
counteroffer reinstates the previous offer
-a breach of contract that substantially lowers the value of the contract for the non-
breaching party is considered to be... - -a material breach
-*which of the following is NOT a material fact related to the property's condition? - -the
existence of easements on the property
-*what is the purpose of a promissory note in a real estate mortgage agreement? - -the
promissory note is what requires the borrower to repay the loan
