Ohio Real Estate Exam Practice Questions And Answers Rated 100% Correct!!

May a consumer who has been harmed by a licensee acting under her license as a real estate salesperson or broker immediately file a claim for payment from the Real Estate Recovery Fund? CORRECT ANSWER: No, the consumer must file a lawsuit, get a final judgment, and attempt to collect A listing agreement in which the agent may possibly be in competition with the client to see who can sell the house first is an exclusive CORRECT ANSWER: agency According to the Statute of Frauds, what does NOT have to be in writing? CORRECT ANSWER: listing agreement If a third party maintains a website for a licensee, places information on the website on behalf of the licensee, and that information becomes outdated or expired, how soon must it be updated or removed? CORRECT ANSWER: Outdated and expired information must be updated or removed within two weeks After issuing a bad check, the Division requires the licensee to send certified funds for all subsequent payments for a period of CORRECT ANSWER: 5 years How much will a licensee be fined for paying fees to the state with a bad check? CORRECT ANSWER: $100 Once a salesperson is affiliated with a broker, what are the steps to be taken to associate with another broker? CORRECT ANSWER: the salesperson must submit an application to the Superintendent What statement regarding condominium ownership is correct? CORRECT ANSWER: A unit owner may devise the property Julie is the new owner of a house and decides to remove the carpet. After doing so, she discovers there is significant pet damage to the hardwood floor beneath the carpet. Julie cuts most of the center of the floor out and replaces it with subfloor. Julie then places a Persian rug over the subfloor. When Julie sells, can she remove the Persian rug? CORRECT ANSWER: No, anything that covers subflooring becomes real property How would a developer/builder typically finance a development? CORRECT ANSWER: blanket For a conventional loan, how much of a borrower's income can be used to service debt? CORRECT ANSWER: 36% What document uses legal title to real property to secure debt? CORRECT ANSWER: mortgage According to the Lead-Based Paint Hazard Reduction Act, what can happen to a licensee if she fails to give a buyer the lead-based paint pamphlet and disclosures? CORRECT ANSWER: - $10,000 fine - 3 times compensatory damages in lawsuit - punishment The non-breaching party to a contract has a duty by law to CORRECT ANSWER: mitigate damages What would be considered evidence of the agency relationship between broker and buyer? CORRECT ANSWER: buyer-broker contract Harvey enters into a lease where he must pay 30 percent of the landlord's expenses. Which type of lease did Harvey sign? CORRECT ANSWER: net lease Which statement regarding RESPA is TRUE? RESPA eliminates kickbacks and other referral fees, prohibits lenders from requiring excessive escrow account deposits, and provides accurate and timely information about the actual cost of buying or selling a home. A wealthy business man whishes to change his last will and testament to exclude a relative who recently died. Which document will the testator use to make the change? CORRECT ANSWER: codicil RATIONALE An addendum would signify a change in the terms of a contract. A certificate of transfer is the instrument used to convey title to a devise. A transfer on death deed transfers title of a decedent's property upon death. A codicil is used to change a last will and testament. When a broker received an unexpected bill, he deposited a client's earnest money check into his personal account to cover the expense. This best describes CORRECT ANSWER: conversion A real estate agent has written an offer in which Luke, the buyer, asked the sellers to pay his half of the escrow fee and his three points. The sellers accepted $135,000 for the home and Luke is going to put $40,000 down. How much will the Luke pay for his points? CORRECT ANSWER: $0 RATIONALE Read carefully: The sellers, not the buyer, are paying the points. For the math practice, the formula is: Loan Amount ($95,000) x number of points ($95,000 x 0.03) = Total Amount paid for points ($2,850). Remember, one point equals 1% or 0.01. The buyer asks for information about the property. Their agent telephones you for that information, but submits an offer before you have time to respond to the call. What do you do with the offer and the information request? CORRECT ANSWER: Respond to the offer and the information request in writing as soon as possible The fee to amend a license to practice real estate is CORRECT ANSWER: $34 What is the fee to transfer a real estate salesperson's license from one brokerage to another? CORRECT ANSWER: $34 The fee to apply for a real estate broker license is CORRECT ANSWER: $135 May a consumer who has been harmed by a licensee acting under her license as a real estate salesperson or broker immediately file a claim for payment from the Real Estate Recovery Fund? CORRECT ANSWER: No, the consumer must file a lawsuit, get a final judgment, and attempt to collect According to the Statute of Frauds, what does NOT have to be in writing? CORRECT ANSWER: listing agreement If a third party maintains a website for a licensee, places information on the website on behalf of the licensee, and that information becomes outdated or expired, how soon must it be updated or removed? CORRECT ANSWER: Outdated and expired information must be updated or removed within two weeks The terms "agency" and "agency relationship" are defined by Ohio law as the relationship between a real estate licensee and the CORRECT ANSWER: person the licensee represents What should a salesperson do if a buyer-client, who happens to be an Hispanic American, instructs the agent to show him homes in areas where "other Hispanics" live? CORRECT ANSWER: ask the client to specify areas of interest A property management account: CORRECT ANSWER: Can earn interest A couple is engaged to be married. Any real estate they own at the time the marriage takes place remains that spouse's property in severalty, and property acquired after the marriage belongs equally to both of them. This type of ownership is referred to as CORRECT ANSWER: community property Community property consists of all property, real and personal, acquired by either spouse during the marriage. Land movement due to an earthquake is called CORRECT ANSWER: avulsion Avulsion is a sudden, violent event (such as an earthquake) that tears and moves land. Property accumulated by husband and wife by the efforts of either, which is equally divisible at time of divorce or dissolution, is called CORRECT ANSWER: community property A property has been renting for $750 per month. Based on comparables, the GRM is 110. What is the indicated value of the property? CORRECT ANSWER: $990,000 The indicated value using a GRM (Gross Rent Multiplier) is the (monthly rent x 12 (months)) x GRM. In this case, ($750 X 12) x 110 = $990,000. While determining the net operating income of an investment property, an appraiser will not take into account CORRECT ANSWER: interest expense Although tax deductible, the amount of interest an owner pays is not used to calculate the net operating income. Remember, anything related to debt service is an owner's expense. Just one day prior to a foreclosure sale, the homeowner pays the bank all past-due payments, late charges, attorney fees, etc. The homeowner saves the property under the right called CORRECT ANSWER: equitable right of redemption Statutory redemption occurs after the sale has been finalized, and is recognized only in those states that have extended the right of redemption to include the period after the sale. Equitable redemption occurs prior to the sale, when the homeowner avoids foreclosure by paying all past-due payments and other monetary obligations. An owner of a property enters into a purchase money mortgage with a buyer whereby the buyer will make payments to the seller and the seller will continue making payments to the mortgagee. Which clause does the lender enforce when sending a notice to the seller that the loan is due and payable? CORRECT ANSWER: alienation The mortgage clause that allows the lender to declare the loan due and payable in the event of a transfer is the alienation clause. Acceleration is the result of borrower default. John is a successful bidder at a sheriff's foreclosure sale. At the sale, he receives a certificate of sale, but does not know what it means. John's lawyer explains that CORRECT ANSWER: he is entitled to a deed upon confirmation of sale by the court, if the land is not redeemed by the original owner during the redemption period An agency agreement that allows the sellers to procure the buyer and forgo paying the broker a commission best describes a(n) CORRECT ANSWER: exclusive agency When the seller has the ability to bring the buyer, yet hires one broker to market the property, the listing agreement is an exclusive agency agreement. During a phone call, a salesperson discusses showing a property to a prospect. Three days later, the agent shows the property; at that time the customer reveals her financial abilities and motivation. Three days after that, the agent prepares her offer and asks the buyer to sign an agency disclosure statement stating the agent represents the seller. When should the agent have disclosed this fact? CORRECT ANSWER: before showing the house An agent is showing a house to a customer. The agent tells the buyer that the seller is desperate for an offer. Which duty has the agent breached? CORRECT ANSWER: loyalty An agent must have the client's permission to reveal such a motivation to a customer. A lead-based paint disclosure form is required for all residential dwellings built before January 1, 1978. When applicable, who must sign the form? CORRECT ANSWER: buyer, seller, and both agents Chelsea is a listing agent working for the listing broker and encounters a customer at the open house. The customer asks Chelsea if she could recommend an offering price. Chelsea should recommend that the customer CORRECT ANSWER: offer list price A listing agent dealing with a customer has a duty only to the seller. It would not be in the seller's best interest to suggest less than list price, or that the seller should pay closing costs. The customer has to request market information from the listing agent; she cannot just volunteer that information. If seller Adam simply decides not to go through with the closing on a sale to buyer William, what can William do about it? CORRECT ANSWER: Sue for specific performance and for damages A successful lawsuit for specific performance may compel Adam to perform his responsibilities under the contract, including transferring title to William. In addition, if William can prove other damages due to Adam's refusal to perform, William may also sue to recover those damages. If the contract was executed (completed), William would have obtained equitable title, and it would not matter that closing had not occurred. When must a buyer inspect the Closing Statement? CORRECT ANSWER: one business day before closing In a suit brought under the Federal Fair Housing law as amended, punitive damages may be as much as CORRECT ANSWER: there is no limit on punitive damages While an individual may be fined $11,000 by HUD for a violation of the Fair Housing Act and $55,000 for a third offense within the past seven years, there is no limit on compensatory or punitive damages awarded by a court of law. Mary has been working with her buyer client for several months when the buyer finally finds a property of interest. Mary shows the property and writes the offer, then calls the listing agent and leaves a message to be called back. Several hours later Mary still has not heard from the listing agent. Finally, Mary calls the seller directly to present the offer. The seller accepts the offer. What is the problem, if any? CORRECT ANSWER: Mary cannot negotiate directly with the owner If the loan value is 80%, and the property is appraised at $86,500 and sold for $88,000, how much would the purchaser be permitted to borrow? The loan value is based on the appraised value, not the sale price. The appraised value is $86,500 and 80% of that amount is $69,200. This would be the maximum the purchaser would be permitted to borrow. A property is appraised at $150,000 and assessed for tax purposes at 35% of value. Calculate the semi-annual tax bill if the mills total is 80. CORRECT ANSWER: $2,100 Don't forget to divide the answer by two as a final step At your listing appointment, your seller asks you if you will always represent her. She mentions she has heard about this "dual thing" regarding real estate agents. Your response is CORRECT ANSWER: "Yes Dual agency is nothing to be afraid of, but you should be aware of its downsides" The power to set continuing education standards is vested with CORRECT ANSWER: the Ohio Real Estate Commission The Ohio Real Estate Commission is vested with the power to set licensing exam standards and continuing education standards. The Superintendent reports to the Commission, and is charged with administering license laws. Agent Brenda took out a quarter page ad in the local newspaper. In the ad, Agent Brenda's name was the same size as the broker's logo. What will be the likely outcome for Brenda? CORRECT ANSWER: agent Brenda will have no consequences The law states that the broker's name must be equal or greater in prominence. Broker Dan decides to save the costs of overhead by increasing the share of commissions his salespersons receive. He also decides to close down the office and have his agents work from home. Which of the following best describes the situation? CORRECT ANSWER: Broker Dan has violated license law O.R.C. 4735.55(A) requires a broker to maintain a definite place of business with a sign indicating it as such outside of the building. An association applying for a real estate license has three members, one of whom is licensed as a real estate broker. The association must submit what document concerning the unlicensed members in order to be issued a real estate license in the association's name? CORRECT ANSWER: an affidavit stating the members will not Act as real estate brokers for the association In anticipation of a property selling at sheriff's sale to the loan servicing company, Eric, a salesperson from Happy Days Realty, planted his sign in the yard and held an open house for a few hours one Sunday. The following Monday, Eric showed the property to another buyer. What other ways can Eric market the property? CORRECT ANSWER: Eric cannot market the property without the consent of the owner Until the sale is confirmed, the loan servicing company cannot list with any broker and Eric does not have a valid listing. Agent Andy was so excited to be writing and presenting his first offer to the seller and listing agent that he forgot to make the offer contingent on the sale of the buyer's current residence. After an investigation and disciplinary hearing, all of the following could happen EXCEPT CORRECT ANSWER: six months probation There are a number of disciplinary actions that can be taken against a licensee ranging from a simple reprimand to permanent revocation of license. Criminal actions would only take place after indictment and prosecution. Agent Arthur showed a property to a buyer who wanted to make an offer. Before Agent Arthur set up the appointment to meet the buyer to execute documents, he got into a heated argument with his broker and decided to leave the brokerage to go to a new one. The day after he signs on with a different broker, Agent Arthur writes the offer with the buyer and presents the offer on behalf of his new broker. The seller accepts the offer. Which of the following choices best describes the situation? CORRECT ANSWER: agent arthur may get punished Since a salesperson can only transact real estate business on behalf of a broker, Agent Arthur may be punished for withholding the broker's client from him. ORC 4735.18 (18) Identify the agency relationship formed when a listing salesperson receives a telephone call from a prospective purchaser, shows the listed property to the prospective customer, helps the prospective purchaser write an offer to purchase, and then delivers the offer to the seller/client? CORRECT ANSWER: With timely agency disclosure, assisting a customer does not form an agency relationship A wife and husband may not hold title to their home as CORRECT ANSWER: tenants at will Tenancy at will is a leasehold estate. What best describes personal property transformed into real property? CORRECT ANSWER: actual annexation Constructive annexation occurs when property is so closely related to real property that the law treats it as such, even though it is not physically attached. The fixture is the item that was transformed. Actual annexation is a physical attachment of personal property to land. Trade fixtures are equipment a tenant can remove and, thus, not real property.