Idaho Real Estate Mod 1 & 2 Exam Questions With Verified Answers

Appraisal - Answer an estimate or opinion of value based on supportable evidence and approval methods CMA - Comparable Market Analysis - Answer an analysis of probable value of real estate done by individual other than an appraiser BPO - Broker Price Opinion - Answer an opinion of value of real estate value done by a licensee with a broker level license. can charge Elements of Value - Answer 1) demand with purchasing power 2) utility 3) scarcity 4) transferability Market Value - Answer estimate of value based on an analysis of data Market Price - Answer what the property actually sold for Cost - Answer the price to build the structure including land cost Regression - Answer pulls down property value Progression - Answer raises property value Over improvement - Answer land improvement more extensive than surrounding neighborhood Principle of Substitution - Answer the value of a property cannot exceed the cost of equivalent substitute properties Principle of Highest and Best Use - Answer the most profitable singe use for a property Plottage - Answer increase in value or utility by combining lots Form Report - Answer most common appraisal report Narrative Report - Answer long, comprehensive appraisal report Three Approaches to Value - Answer 1) Market Data Approach aka Sales Comparison Approach 2) Cost Approach 3) Income Approach Sales Comparison Approach (Market Data Approach) - Answer value obtained by comparing similarly sold properties Cost Approach - Answer used to obtain value on new structures or custom structures such as museums, library, factory Cost Approach - Answer Cost - depreciation + land cost Sales Comparison Approach (Market Data Approach) - Answer if comparable is superior deduct from value, if inferior add to value Physical Deterioration - Answer deferred maintenance (curable) peeling paint, bad roof, bad floors, broken windows, termite damage..etc Functional Obsolescence - Answer out-dated design or feature (curable) low ceilings, 6 bd/1 bth, split entry, knob & tube wiring External or Economic Obsolescence - Answer conditions outside property lines; airport flight path, next to free way, businesses close Income Approach - Answer based on current value of the right to future income Capitalization - Answer determining the value of the property by interpreting the property's net income with a percentage (NOI) Gross Income Multiplier - Answer sales price / gross income = Gross Rent Multiplier - Answer ratio based on current or projected rent sales price/gross rent First substantial business contact - Answer when is Blue Brochure given? Mortgagor - Answer buyer or borrower Mortgagee - Answer lender Lien Theory State - Answer mortgagor (buyer) retains both legal and equitable title Title Theory State - Answer legal title to the mortgagee (lender) Elements of a real estate loan - Answer note and security instrument Types of security instruments - Answer Deed of Trust, Mortgage, Contract for Deed Type of security instrument for 40 + acres agriculture - Answer mortgage Type of security instrument for less than 80 acres non-agricutural - Answer Deed of Trust or Mortgage Type of security instrument for 80+ acres any use - Answer Mortgage Contracts for Deed ( Land Sales Contract) - Answer owner carry Note - Answer the borrowers personal promise to repay Usury Laws - Answer legal limits on interest rates (Idaho is 12%) Terms - Answer length of loan Loan Origination Fees - Answer fee computed off of loan amount Discount Point - Answer pre-paid interest equaling 1% of loan amount Hypothecation - Answer the pledging of property as security on a loan Defeasance Clause - Answer requires lender to release their interest when paid in full Deed of Reconveyance - Answer a recorded document which gives notice a deed in trust has been paid in full Demand Features - Answer Acceleration clause, due on sale clause, alienation clause Subject to - Answer seller remains liable for the loan Assumption of - Answer seller may be released of liability Non-judicial foreclosure - Answer foreclose on Deed of Trust Notice of Default - Answer first formal notice recorded regarding Deed of Trust foreclosure Notice of Trustee's Sale - Answer notice of foreclosure on Deed of Trust; a) mailing b)posting 3 attempts within 7 days c) publication once per week 4 times at least 30 days before sale Reinstatement Right - Answer up to 115 days to make up all back charges to lender to stop foreclosure on Deed of Trust 120th Day - Answer day in which Deed of Trust foreclosure can go up for auction No Redemption Right - Answer Deed of Trust foreclosure does not allow borrower rights to property after sale Judicial Foreclosure - Answer Court required foreclosure on a mortgage 6 months redemption right - Answer for property 20 acres or less in judicial foreclosure 12 month redemption right - Answer for property 20 acres or more in judicial foreclosure Sheriff's Deed - Answer deed given at end of redemption period to winner on judicial foreclosure Foreclosure for Land Sale Contract (Contract for Deed) (Owner Carry) - Answer no rights at foreclosure, mortgagee can re-enter and seize Deed in Lieu - Answer form of foreclosure known as a friendly foreclosure Redemption - Answer the right of a mortgagor to buy back their property, can also be used in tax sales Reinstatement - Answer paying current only those payments delinquent plus foreclosure costs Deed to Purchaser at Trustees Sale - Answer title contains no warranties, transfer from foreclosure sale Deficiency Judgement - Answer borrower may be order to repay any losses to bank within 90 days Vendor - Answer seller in Land Sales Contract Vendee - Answer buyer in Land Sales Contract Short Sale - Answer sale of property for less than what is owed to the bank, bank has 5 years to seek deficiency judgement TILA - Truth in Lending Act - Answer 1974 Federal Legislation to inform buyers of all financing charges and true cost of borrowing Regulation Z - Answer discloses to buyer how much credit is actually costing them 3-day right of rescission - Answer limited right to cancel a credit transaction; does not apply to purchases or non-owner occupied refi's Penalty for TILA violations - Answer 10k per day or 2x actual finance charges; 10 k for unfair or deceptive practices Package Mortgage - Answer loan for real estate plus personal property Double Contract - Answer illegal; agents incentives must not create Seller - Answer who fills our Seller's Property Condition Disclosure within 10 calendar days of Purchase and Sales Agreement - Answer when must Seller provide Seller's Property Disclosure to buyer 3 business days - Answer number of days buyer has to rescind the contract 1-4 residential resale units - Answer which properties does Seller's Property Disclosure apply to Buying of Selling of agents own property - Answer must run transaction through agents broker Adverse Material Facts - Answer anything that would affect the value or desirability to a reasonable person Everybody - Answer who must Adverse Materials Facts be disclosed to? In writing - Answer how should Adverse Material Facts be disclosed? (Brokerage name) Trust Account - Answer earnest money checks are made out to? Promissory Note - Answer earnest deposit without cash available or post dated check Immediately at signing of Purchase and Sales Agreement - Answer when do you collect earnest money check Turn in immediately to broker's office - Answer what to do with earnest money check Commingling - Answer placing entrusted funds in wrong account or non entrusted funds in trust account Earnest money disbursement - Answer at closing, when parties agree, by court order (interpleader) Interpleader - Answer court order to distribute earnest money Write rejected across form, sign, date - Answer how to reject an offer When does an offer expire? - Answer when contract says offer expires Can an offeror withdraw their offer before expiration? - Answer yes, prior to offer accepting When to stop presenting offers to sellers? - Answer when the property closes escrow What type of depreciation considers factors outside the property lines? - Answer economic obsolescence What is correct regarding functional obsolescence? - Answer it is curable Using a cap rate in the income approach helps one determine? - Answer the market value of an income producing property Assembling lots to make one large parcel worth more than the combined values is: - Answer plottage Where there are lots of comparable sales it is best to use which approach to value? - Answer market data approach ( sales comparison approach) Determining a properties most valuable and profitable use is the study of? - Answer highest and best use What types of properties would the cost approach to value be best to use? - Answer properties where no comparable exists in the market data approach (sales comparison approach), what would you do if a comparable had an upgrade the subject didn't have? - Answer deduct from the comparable Which approach to value requires we compute the dollar amount of depreciation? - Answer the cost approach Which is not an approach to value in appraisal? - Answer appraisal approach What principle of value addresses how well a property conforms to its surroundings? - Answer progression / regression What type of appraisal is most commonly used in residential sales? - Answer form report How do you release a deed of trust when paid? - Answer Deed of Reconveyance What document evidences a debt? - Answer Promissory Note Amortization means? - Answer reducing debt through periodic payments of principal and interest Where do you go to get a VA loan? - Answer an approved VA lender If you are behind on a debt what right allows you to catch up and keep you loan in place? - Answer reinstatement What is regulation Z designed to disclose? - Answer the borrowers true cost of the loan What is pledging property as collateral? - Answer hypothecation Who is on title in a lien theory state? - Answer mortgagor (buyer) What does a usury law do? - Answer set legal interest rates What is the responsibility of the owner if they sell their property "subject to"? - Answer to make sure the new buyer pays as agreed Mortgages and Deeds of Trust are considered? - Answer security instruments If a mortgage in a 600 acre farm is foreclosed on, how long does the mortgagor have to redeem? - Answer 12 months In a land sale contract, who retains title to the property while the payments are being made? - Answer the vendor (seller) A package mortgage has which features? - Answer real estate plus personal property 4 Advertising Trigger Words? - Answer a) apr; b) down payment; c) term: d) payment amount Can a seller fire their listing broker? - Answer yes, but the seller may be liable for damages How are pre-paid HOA dues handled at closing? - Answer A seller credit and buyer debit If you put an e-money deposit in your personal account and then write a check to your Broker's trust account what has happened? - Answer commingling When does an offer expire? - Answer as per the offer terms Who disburses trust account funds and when? - Answer a broker when the transaction closes When writing an offer, licensees may? - Answer Fill in the blanks What should you inform a seller who wishes to hide an adverse material fact? - Answer all interested parties must be informed of the defect Who usually has responsibility of providing evidence of good title? - Answer the seller To whom does a buyer write out a deposit check? - Answer the responsible Broker's company trust account Which of the following items appear on the settlement statements? - Answer brokerage compensation Can a seller accept an offer from buyer #2 while waiting to hear if buyer #1 will accept the seller's counter-offer? - Answer yes, but the seller should withdraw the counter-offer made to buyer #1 Which is not a seller's remedy after a buyer default? - Answer misrepresentation What federal law prohibits kickbacks from lenders and title companies? - Answer RESPA Who has to verify all settlement statements are accurate? - Answer the Broker When is flood insurance required? - Answer if you use a federally related mortgage loan and live in a flood plain What if a buyer asks you to hold their deposit check until next payday? - Answer take a promissory note along with the check Can a seller accept an offer that has expired? - Answer Yes, but the buyer needs to acknowledge the late acceptance What should happen if the deposit check bounces? - Answer the Broker informs all parties in writing An Agent should do what with the preliminary title report? - Answer read it and share it will their party What does "lis pendent" mean? - Answer lawsuit pending What form would be used to ask for a different closing date during escrow? - Answer an Addendum How long does the deposit stay in trust? - Answer until escrow closing A listing agent is an agent for the? - Answer seller Seller remedies for buyer default? - Answer a) actual damages: b) liquidated damages: c) specific performance Personal property that, by its attachment to real property, is regarded as real estate is called _____________. - Answer a fixture What is the main purpose of police power? - Answer To protect the health, safety, and welfare of the community. If a person has complete control over their property, and the ownership in the property is not defeasible, what interest does the person have in the property? - Answer fee simple estate Which of the following is the difference between the value of a property and the total amount of liens against the property? - Answer equity A metes-and -bounds legal description _____________. - Answer must commence and finish at the same identifiable point Your neighbors use a portion of your property to reach their guest apartment, which is on their property. As far as you can recall, you never gave them permission to use your property, and you discuss with your attorney the possibility of preventing the neighbors from using your property. Your attorney explains that the ownership of the neighbors' real estate includes an easement appurtenant giving them the right to use that portion of your property. Your property is the _____________. - Answer servient tenement There are no nationwide or statewide zoning laws. - Answer True What is the difference between a specific lien and a general lien? - Answer A specific lien is secured by a specific piece of property, and a general lien is secured by the collective assets of the person against whom the lien is held. All of the following are agency relationships EXCEPT _____________. a. the attorney-client relationship b. the real estate salesperson-buyer relationship c. the real estate broker-buyer relationship d. the listing broker-seller relationship e. None of the above - they all have agency relationships - Answer the real estate salesperson-buyer relationship