Final test practice for New Jersey real estate test with verified solutions

Final test practice for New Jersey real estate test with verified solutions Who appoints the 8 members of the New Jersey Real Estate Commission? Governor Who makes the payments to a claimant from the Guaranty Fund? The state treasurer Agent Louis Lee is working with several people from his home town in Hong Kong. They sought him out because he speaks their native language. The Chans are anxious to purchase a house before the school year starts. Agent Lee listens to their needs and tells them, "I know exactly where you will be comfortable". Has agent Lee committed any violation? For Steering Beth decides she wants to change brokers. How long does her broker have to return her license? 5 days after her request Agent Mike Brown is representing both buyer and seller in the same transaction. Since the contract was signed by all parties, did Mike have any other obligation? Obtain written consent of principals At time of license renewal, what is the renewal charge for a salespersons license? 100 Marie is a buyer agent. She shows many listings each week. Marie has a very good working relationship with both buyers and sellers. Who does Marie owe a fiduciary relationship to? The buyer John a licensee is a dual agent in this transaction. Both parties have agreed to compensate him for a job well done. John is very happy about the dual payment. He feels he deserves it as a top notch producer. What statement is true regarding this transaction? John violated the NJ License Act 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 the Julie sells, can she remove the Persian rug? No, anything that covers subflooring becomes real property Property accumulated by husband and wife by the efforts of either, which is equally divisible at time of divorce or dissolution, is called community property Bob and Jerry take title together. Both Bob and Jerry own one-half of the same property. What form of co-ownership does the law presume? tenancy in common What is an involuntary specific lien? mechanic's lien Encumbrances on real estate may include easements, liens, and deed restrictions Which would NOT result from the exercise of police power? developer's restrictive covenants Which gives a government the right to take private property for public use provided the owner is given just compensation? eminent domain A landowner needs water. His land has no access to a water source. However, the landowner is granted the right to use water from a nearby river, to irrigate his land. What right grants this permission? appropriative rights What is the best example of functional obsolescence? walking through on bedroom to reach another While determining the net operating income of an investment property, an appraiser will not take into account interest expense What is an appraisal? an opinion of value for the day of the appraisal only Reproducing a structure best describes building an exact replica of the structure According to USPAP, what is the definition of market value? the most probable price a property will bring What is NOT part of the secondary market? Federal Universal Mortgage Association What document uses legal title to real property to secure debt? mortgage A note that calls for periodic payments of principal only, with a balloon payment at the end of the loan term, is called a(n) installment note The money to fund FHA loans is provided by lending institutions A court order instructing an official (e.g., a sheriff) to sell property in order to pay a judgment is called writ of execution Refusing to make loans based on the racial composition of a neighborhood is called redlining Who is NOT an agent or subagent? a non-licensed personal assistant of an agent What type of relationship best describes how a real estate broker represents her principal in the sale of the principal's single-family home? special or specific agency Which is NOT a fiduciary duty? achievement A broker lists a home. Which CANNOT terminate this agreement? death of a salesperson A dual agent CANNOT all of the answers listed What was the primary reason asbestos was used prior to our knowledge of the health risks? : fire resistance The listing agent is informed by the seller that the basement gets wet when it rains. The agent says nothing to the buyer. Who is liable for the failure to disclose the latent defect? seller The offeror is the person who makes the offer An option, prior to being exercised, is an example of a(n) unilateral contract A contract in which each party to the agreement has an obligation under that agreement is a(n) bilateral contract When a buyer agrees to purchase a new home on the condition that the salesperson sells his current home, the salesperson should include a "subject to sale" clause in the agreement of sale for the new property An implied contract is a(n) agreement not put into words, either written or verbal Archie and Bert mutually agree to terminate a contract. The buyer, Bert, asks for the earnest money back and the seller, Archie, consents. This is an example of rescission Which refers to the interest in real property created by the execution of a valid sales contract? equitable title Ann pays homeowner's insurance in advance for one year in the amount of $100. Ann sells her property to Bill and closes the sale on June 30th. Assuming that Ann paid the homeowner's insurance on January 1st of that year, how would the insurance be prorated between the buyer and seller? $50 debit to buyer, $50 credit to seller A brief summary of a property's history, listing all recorded documents that may affect the title, is a(n) abstract of title Which law is being violated when agents from different firms discuss and agree upon commission rates? Sherman Antitrust Act A salesperson goes on a listing appointment where the owner informs the agent that he has missed a couple of mortgage payments. The property values have declined and now the owner owes more for the property than it's worth. In order for the owner to sell without needing to bring money to the closing table, the agent should suggest that the seller negotiate a short sale with his bank An out-of-state prospect asks an agent to locate a diverse neighborhood for him. The agent should explain that research of this nature is beyond the agent's scope of authority Question (5 of 12) Tommy Gee encounters an owner of a property who has no equity in the home because of a sharp decline in market values. The owner asks Tommy to market the property at market value but asks Tommy if he could negotiate with the bank and orchestrate a short sale. Who should Tommy recommend the owner consult with before making a decision? Brian attends his real estate company's party and, after having a few too many cocktails, drives home. He is pulled over and arrested for driving under the influence. Two months later Brian is convicted and serves a year of probation and pays a fine. Brian does not notify the regulatory agency of this conviction. Which best describes this situation? Brian may be punished for not disclosing the conviction Tommy Gee encounters an owner of a property who has no equity in the home because of a sharp decline in market values. The owner asks Tommy to market the property at market value but asks Tommy if he could negotiate with the bank and orchestrate a short sale. Who should Tommy recommend the owner consult with before making a decision? accountant A salesperson commits racial steering if he all of the answers listed A listing agent tells a buyer customer the seller is desperate for an offer. The buyer asks the agent if the agent could tell him the seller's bottom line so the negotiations will be brief. The agent suggests 10% under list price. The seller accepts the offer. Has there been a violation? Yes, a breach of duty to the seller has occurred A buyer's agent is paid a percentage of the gross sale price. When negotiating a contract, the agent should negotiate the lowest possible price for the client 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. $2,100 Don't forget to divide the answer by two as a final step. The formula for obtaining property taxes is as follows: Take the appraised value of $150,000 and multiply it by the assessed rate of 35%, which will yield the assessed value. Next, take the assessed value and multiply it by the millage of 80 and divide the answer by 1,000 (as mill means $1 per $1,000). This will give an answer of $4,200, but remember to divide by two, since the question asks for the semi-annual tax bill: $4,200 / 2 = $2,100. Tom and Terri Bronson earn a combined gross annual income of $94,500. They want to purchase a $260,000 home and plan to obtain a $230,000 conventional loan at 5.75% for 30 years. The monthly principal and interest payment will be $1,950, the hazard insurance premium is $49, the taxes are $135, and the financed private mortgage insurance premium is $41.25. Their only long-term debt is a $330 per month car payment and a $310 student loan payment. What is the maximum monthly debt Tom and Terri can have and still qualify for the loan if the lender uses 28/36 ratios? $2,835 Let's calculate their total debt payment by adding their car payment of $330 and student loan payment of $310 to their total house payment of $2,175.25 to get a total debt payment of $2,815.25. We know Tom and Terri have a combined gross annual income of $94,500. To determine the combined gross monthly income, you divide $94,500 by 12 months, which equals $7,875. Now, divide the total debt payment of $2,815.25 by the combined monthly income of $7,875 to get 0.3575 or 36%. This does not exceed the LTD ratio of 36%. ($7,875 x 0.36 = $2,835) Therefore, $2,835 would be the maximum monthly debt Tom and Terri must maintain to qualify for the loan. Jamie wants to sell her home. She must pay off her existing $97,500 mortgage and pay $5,000 in closing costs. Rounding your answer to the nearest dollar, if she pays a 7% commission, what is the minimum offer she can accept? 110,215 Two steps are required to solve this problem. First, add the expenses: $97,500 + $5,000 = $102,500. This is the whole/base cost. Now, factor in the broker's commission fee. The Sale Price = 100% and the Commission = 7%; thus, net to Matt equals 93% (100% - 7% = 93%). Now, use the net to owner/seller pricing formula, Whole (Total/Gross Sale price) = Part (Net amount + Expenses) / Percent (100% minus deductions) and plug in the known values: $102,500 / 0.93 = $110,215.05. Rounded, Matt should sell his home for a minimum of $110,215. A buyer deposited $15,500 on a $210,000 home. He has an 80% loan, receives a $1,500 proration credit, pays a $1,000 attorney fee, and pays 2 points on the mortgage. How much money must the buyer bring to closing? 29,360 First, calculate the loan amount: $210,000 x 0.80 = $168,000. Now, subtract the loan amount from the purchase price to determine the down payment: $210,000 - $168,000 = $42,000. Next, subtract the money the buyer already deposited and also the proration credit; $42,000 - $15,500 - $1,500 = $25,000. Now, calculate the amount owed in points; $168,000 x 0.02 = $3,360. Finally, add all of the expenses together; $25,000 (remaining down payment) + $3,360 (points) + $1,000 (attorney fee) = $29,360. The buyer must bring $29,360 to the closing. The square footage of a two-story building that is 54' x 40' is 4,320 sq ft 54' x 40' x 2 (there are two floors) = 4,320 square feet.