Florida Real Estate Broker's Exam
Prep Questions with Verified Answers
Which statement is TRUE concerning radon? - ANSWERSTwo homes next door to
each other may have very different levels of radon.
Hazel's brokerage firm has an annual expense budget of $162,000 that includes her
own salary. She wants to make $20,000 profit. If she has seven sales associates, what
must each sales associate generate in company dollars for Hazel to achieve her goal? -
ANSWERSThe answer is $26,000. Required revenue is $182,000. ($20,000 +
$162,000). Each sales associate must bring in at least $26,000 in gross revenue
($182,000 ÷ 7)
A business appraiser, when valuing assets of a going concern should use -
ANSWERSmarket value.
What mortgage right allows a borrower to prevent a foreclosure by paying the entire
balance due to the lender? - ANSWERSEquity of redemption
Jack and Jill form a general partnership real estate brokerage entity. Jill has an active
broker license, but Jack does not. Jill is killed in a car accident. Which statement is
TRUE regarding this situation? - ANSWERSA new active broker must fill the vacancy
within 14 calendar days and register with the DBPR.
Which individual is required to hold a Florida real estate license? - ANSWERSAn
individual who negotiates long-term lease agreements for commercial property
A licensed Florida real estate broker decides to move to Quebec, Canada. What must
the broker do regarding his license? - ANSWERSNotify the Commission of his
nonresident status within 60 days of the change in residency
A home is sold for $398,000. The buyers gave their broker a $10,000 good-faith
deposit. The buyers will finance the purchase with a new 75% loan-to-value mortgage
loan.
Closing date is July 3, with the day of closing charged to the buyer. Property taxes are
$8,412 and homeowners association dues are $125 monthly and were paid in advance.
Prorations should be made using the 365-day method.
The sellers will pay the 7% brokerage fee, the documentary stamp tax on the deed, and
title insurance of $2,200.
The buyers will pay the appropriate state taxes on the note and mortgage, $66 in
recording fees, and $475 in survey costs.
Based on this information, answer the following question about how the transaction will
be shown on the Closing Disclosure.
,Where are the totals of the buyers' and the sellers' expenses shown? -
ANSWERSPages 2 and 3
The expenses are itemized on Page 2; they are totaled on Page 3.
An owner has a capital gain of $147,000 on the sale of her home. She has owned the
property for three years. The sale price was $325,000. Costs of the sale were $5,000,
qualified fix-up costs were $1,000, and moving costs were $4,000. How much must she
pay in capital gains taxes on this sale if her normal tax rate is 20%? - ANSWERSThe
answer is $0. Income tax rules allow a single filer to exclude tax on up to $250,000 of
the gain from the sale of the filer's principal residence.
The Federal Housing Administration (FHA) program that insures condominium
mortgage loans is a Section - ANSWERSThe answer is 234(c). The 203(b) program is
for single-family residences or duplexes; the 235 loan is defunct; the FHA 245 loan is
called a growing equity loan.
A developer owns an office building that is encumbered by a mortgage. He leases
10,000 square feet to a tenant for 10 years at a very attractive rate. Six months later,
the bank forecloses on the mortgage and ends up as the property owner. What is the
status of the tenant's lease? - ANSWERSThe answer is the bank may terminate the
tenant's lease. If a tenant leases property that has a superior mortgage lien, the lender
may foreclose the lease rights. Tenants who believe they have valid long-term leases at
very low rates could become month-to-month tenants after the foreclosure sale.
Which is FALSE about adjustable-rate mortgages? - ANSWERSThe answer is it is
unpopular because it has negative amortization of the principal. Fannie Mae will not
purchase loans with negative amortization. Negative amortization occurred in loans
years ago when the amount of the payment was frozen, but the interest rate could
fluctuate freely.
What is the formula to calculate the equity dividend rate? - ANSWERSThe answer is
before-tax cash flow divided by the owner's equity. The equity dividend rate is used
most frequently in the investor's initial analysis.
The cost approach is MOST applicable to which appraisal assignment? -
ANSWERSThe answer is 1-year-old duplex in an area of mixed use. The cost approach
is most appropriate when the site value is well substantiated, the improvements are new
or nearly new and represent the highest and best use of the site, and the improvements
do not suffer from substantial depreciation. This approach is also used for special
purpose properties, such as hospitals, community colleges, fire stations, and libraries.
The sales comparison approach is best for the residential home. The income approach
is best for the bread company and the gasoline station.
The reproduction cost new of a structure is $215,000 and the land value is $30,000. The
structure is 9 years old and has an effective age of 7 years. Assuming a total economic
, life of 60 years, calculate the accrued depreciation using the age-life method. (Round to
the nearest dollar.) - ANSWERSThe answer is $25,083.
$215,000 reproduction cost new divided by 60 years total economic life = $3583.3333
annual depreciation × 7 years effective age = $25,083
A title insurance company offers to pay a real estate sales associate $50 for each Real
Estate Settlement Procedures Act (RESPA) closing she refers to the company. This is -
ANSWERSThe answer is prohibited under RESPA. No person may give or accept
anything of value (kickback) for referrals of settlement service business associated with
a federally related mortgage loan. Neither may a person give or accept any part of a
charge for services that are not performed.
An administrative complaint was filed against a broker. The probable-cause panel found
reasonable grounds for prosecution. The broker has received a formal complaint. He
disagrees with the violations alleged in the formal complaint. The broker -
ANSWERSThe answer is is entitled to have the case heard by an administrative law
judge in a formal hearing. When an administrative complaint is mailed to a licensee, the
licensee also receives an Election of Rights form. If the licensee disputes the allegations
of fact, the licensee, can list the allegations in dispute and request a formal hearing.
A home is sold for $398,000. The buyers gave their broker a $10,000 good-faith
deposit. The buyers will finance the purchase with a new 75% loan-to-value mortgage
loan.
Closing date is July 3, with the day of closing charged to the buyer. Property taxes are
$8,412 and homeowners association dues are $125 monthly and were paid in advance.
Prorations should be made using the 365-day method.
The sellers will pay the 7% brokerage fee, the documentary stamp tax on the deed, and
title insurance of $2,200.
The buyers will pay the appropriate state taxes on the note and mortgage, $66 in
recording fees, and $475 in survey costs.
Based on this information, answer the following question about how the transaction will
be shown on the Closing Disclosure.
What are the documentary stamp taxes and intangible taxes on the deed and the
mortgage? - ANSWERSThe answer is debit seller $2,786, debit buyer $1,641.75; page
2. Seller pays doc stamps on deed: 3980 units × .70 = $2,786.00. Buyer pays doc
stamps on note and intangible taxes on mortgage. Step 1: calculate amount of
mortgage. $398,000 × .75 = $298,500. Step 2: calculate doc stamps on note. 2,985
units × .35 = $1,044.75. Step 3: calculate intangible taxes on mortgage. $298,500
× .002 = $597.00. Step 4: add buyers costs together $1,641.75.
Who would NOT be considered a potentially responsible person (PRP) under the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)?
- ANSWERSThe answer is a prospective buyer of a contaminated site who executed an
offer to purchase. CERCLA broadly defines those liable for cleanup to include any
potentially responsible person (PRP). PRPs include present owners and operators of a
contaminated site, persons who owned or operated a site at the time hazardous
Prep Questions with Verified Answers
Which statement is TRUE concerning radon? - ANSWERSTwo homes next door to
each other may have very different levels of radon.
Hazel's brokerage firm has an annual expense budget of $162,000 that includes her
own salary. She wants to make $20,000 profit. If she has seven sales associates, what
must each sales associate generate in company dollars for Hazel to achieve her goal? -
ANSWERSThe answer is $26,000. Required revenue is $182,000. ($20,000 +
$162,000). Each sales associate must bring in at least $26,000 in gross revenue
($182,000 ÷ 7)
A business appraiser, when valuing assets of a going concern should use -
ANSWERSmarket value.
What mortgage right allows a borrower to prevent a foreclosure by paying the entire
balance due to the lender? - ANSWERSEquity of redemption
Jack and Jill form a general partnership real estate brokerage entity. Jill has an active
broker license, but Jack does not. Jill is killed in a car accident. Which statement is
TRUE regarding this situation? - ANSWERSA new active broker must fill the vacancy
within 14 calendar days and register with the DBPR.
Which individual is required to hold a Florida real estate license? - ANSWERSAn
individual who negotiates long-term lease agreements for commercial property
A licensed Florida real estate broker decides to move to Quebec, Canada. What must
the broker do regarding his license? - ANSWERSNotify the Commission of his
nonresident status within 60 days of the change in residency
A home is sold for $398,000. The buyers gave their broker a $10,000 good-faith
deposit. The buyers will finance the purchase with a new 75% loan-to-value mortgage
loan.
Closing date is July 3, with the day of closing charged to the buyer. Property taxes are
$8,412 and homeowners association dues are $125 monthly and were paid in advance.
Prorations should be made using the 365-day method.
The sellers will pay the 7% brokerage fee, the documentary stamp tax on the deed, and
title insurance of $2,200.
The buyers will pay the appropriate state taxes on the note and mortgage, $66 in
recording fees, and $475 in survey costs.
Based on this information, answer the following question about how the transaction will
be shown on the Closing Disclosure.
,Where are the totals of the buyers' and the sellers' expenses shown? -
ANSWERSPages 2 and 3
The expenses are itemized on Page 2; they are totaled on Page 3.
An owner has a capital gain of $147,000 on the sale of her home. She has owned the
property for three years. The sale price was $325,000. Costs of the sale were $5,000,
qualified fix-up costs were $1,000, and moving costs were $4,000. How much must she
pay in capital gains taxes on this sale if her normal tax rate is 20%? - ANSWERSThe
answer is $0. Income tax rules allow a single filer to exclude tax on up to $250,000 of
the gain from the sale of the filer's principal residence.
The Federal Housing Administration (FHA) program that insures condominium
mortgage loans is a Section - ANSWERSThe answer is 234(c). The 203(b) program is
for single-family residences or duplexes; the 235 loan is defunct; the FHA 245 loan is
called a growing equity loan.
A developer owns an office building that is encumbered by a mortgage. He leases
10,000 square feet to a tenant for 10 years at a very attractive rate. Six months later,
the bank forecloses on the mortgage and ends up as the property owner. What is the
status of the tenant's lease? - ANSWERSThe answer is the bank may terminate the
tenant's lease. If a tenant leases property that has a superior mortgage lien, the lender
may foreclose the lease rights. Tenants who believe they have valid long-term leases at
very low rates could become month-to-month tenants after the foreclosure sale.
Which is FALSE about adjustable-rate mortgages? - ANSWERSThe answer is it is
unpopular because it has negative amortization of the principal. Fannie Mae will not
purchase loans with negative amortization. Negative amortization occurred in loans
years ago when the amount of the payment was frozen, but the interest rate could
fluctuate freely.
What is the formula to calculate the equity dividend rate? - ANSWERSThe answer is
before-tax cash flow divided by the owner's equity. The equity dividend rate is used
most frequently in the investor's initial analysis.
The cost approach is MOST applicable to which appraisal assignment? -
ANSWERSThe answer is 1-year-old duplex in an area of mixed use. The cost approach
is most appropriate when the site value is well substantiated, the improvements are new
or nearly new and represent the highest and best use of the site, and the improvements
do not suffer from substantial depreciation. This approach is also used for special
purpose properties, such as hospitals, community colleges, fire stations, and libraries.
The sales comparison approach is best for the residential home. The income approach
is best for the bread company and the gasoline station.
The reproduction cost new of a structure is $215,000 and the land value is $30,000. The
structure is 9 years old and has an effective age of 7 years. Assuming a total economic
, life of 60 years, calculate the accrued depreciation using the age-life method. (Round to
the nearest dollar.) - ANSWERSThe answer is $25,083.
$215,000 reproduction cost new divided by 60 years total economic life = $3583.3333
annual depreciation × 7 years effective age = $25,083
A title insurance company offers to pay a real estate sales associate $50 for each Real
Estate Settlement Procedures Act (RESPA) closing she refers to the company. This is -
ANSWERSThe answer is prohibited under RESPA. No person may give or accept
anything of value (kickback) for referrals of settlement service business associated with
a federally related mortgage loan. Neither may a person give or accept any part of a
charge for services that are not performed.
An administrative complaint was filed against a broker. The probable-cause panel found
reasonable grounds for prosecution. The broker has received a formal complaint. He
disagrees with the violations alleged in the formal complaint. The broker -
ANSWERSThe answer is is entitled to have the case heard by an administrative law
judge in a formal hearing. When an administrative complaint is mailed to a licensee, the
licensee also receives an Election of Rights form. If the licensee disputes the allegations
of fact, the licensee, can list the allegations in dispute and request a formal hearing.
A home is sold for $398,000. The buyers gave their broker a $10,000 good-faith
deposit. The buyers will finance the purchase with a new 75% loan-to-value mortgage
loan.
Closing date is July 3, with the day of closing charged to the buyer. Property taxes are
$8,412 and homeowners association dues are $125 monthly and were paid in advance.
Prorations should be made using the 365-day method.
The sellers will pay the 7% brokerage fee, the documentary stamp tax on the deed, and
title insurance of $2,200.
The buyers will pay the appropriate state taxes on the note and mortgage, $66 in
recording fees, and $475 in survey costs.
Based on this information, answer the following question about how the transaction will
be shown on the Closing Disclosure.
What are the documentary stamp taxes and intangible taxes on the deed and the
mortgage? - ANSWERSThe answer is debit seller $2,786, debit buyer $1,641.75; page
2. Seller pays doc stamps on deed: 3980 units × .70 = $2,786.00. Buyer pays doc
stamps on note and intangible taxes on mortgage. Step 1: calculate amount of
mortgage. $398,000 × .75 = $298,500. Step 2: calculate doc stamps on note. 2,985
units × .35 = $1,044.75. Step 3: calculate intangible taxes on mortgage. $298,500
× .002 = $597.00. Step 4: add buyers costs together $1,641.75.
Who would NOT be considered a potentially responsible person (PRP) under the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)?
- ANSWERSThe answer is a prospective buyer of a contaminated site who executed an
offer to purchase. CERCLA broadly defines those liable for cleanup to include any
potentially responsible person (PRP). PRPs include present owners and operators of a
contaminated site, persons who owned or operated a site at the time hazardous
