Real Estate Practice Final Exam (Chapters 1-12)

A broker brings his seller an offer from a potential buyer. If the seller asks about the buyer's race, the broker: - answer-may not disclose this information, because to do so would violate the Rumford Act A broker received an offer with a deposit for one of his listings. The seller accepted the offer. But before the transaction closed, the buyer and seller mutually agreed to cancel it. The buyer requests the return of the deposit, and the seller has no objection. The broker: - answer-must return all of the deposit, but may then sue the seller for his commission A buyer obtains a 90% institutional loan for $270,000 toward the purchase of a $300,000 house. The buyer does not have the necessary $30,000 for the downpayment, so the seller takes back a $15,000 ten-year mortgage and the buyer contributes the other $15,000 in cash. This arrangement is known as a/an: - answer-seller second A contingent sale collapses because the buyer is unable to sell his own property. Which form is it appropriate to use at this point? - answer-Cancellation agreement A landlord has two apartments available for rent. Because he feels that married couples and women tend to be better tenants, he decides to charge a higher security deposit for single men. Additionally, he places a newspaper ad stating "Women and married couples preferred." Which of the following is true? - answer-Both the higher security deposit and the newspaper ad violate the Fair Housing Act A lender calculating a loan applicant's stable monthly income would be most likely to count: - answer-income from self-employment consisting of a continuous series of short-term consulting positions for the last three years A list of the rental rates assigned to the various types of units in a property is called a: - answer-rental schedule A listing agent receives three offers on a house almost simultaneously. The first two offers are for $4,000 and $5,000 less than the listing price, while the third offer is for $20,000 less than the listing price. The agent should: - answer-submit all three offers to the seller as soon as possible A listing agent: - answer-always represents the seller A listing agreement would be enforceable if it were signed by any of the following, except: - answer-a real estate broker on behalf of an out-of-state seller A lower loan-to-value ratio corresponds to a higher: - answer-amount of equity in the property A property manager is likely to be concerned with all of the following, except: - answer-going commission rates on real estate sales A property manager's budget for a client's property will typically include which of the following as operating expenses? - answer-Management fees A provision that is related to a financing contingency (and which may be included as part of a financing contingency clause) is a/an: - answer-appraisal contingency A purchase agreement should contain all of the following, except: - answer-commission rate for listing broker A real estate agent's advertisements for residential property should always include: - answer-the Equal Housing Opportunity logo or slogan A seller accepts a contingent backup offer from a second buyer and notifies the first buyer under a release clause. The first buyer decides to remove the sale of buyer's property contingency. What happens next? - answer-The seller and the first buyer will complete the transaction, assuming the buyer can come up with the downpayment A seller offers to pay six discount points on behalf of the buyer. This will reduce the buyer's interest rate from 9% to 8%. This is known as a: - answer-buydown A seller's counteroffer: - answer-terminates the original offer A standard homeowner's hazard insurance policy will not cover: - answer-earthquake A substantial good faith deposit: - answer-demonstrates the buyer's intention to complete the purchase if the offer is accepted A transaction is financed on terms that are standard in the community and that did not affect the price paid for the property. Appraisers refer to this as: - answer-cash equivalent financing A transfer disclosure statement would not be required in the sale of a: - answer-retail space in a commercial district Agent Peter is working with a buyer who is interested in a "For Sale by Owner" property she saw on her way to work. Peter would like to approach the owner to see if he'll list his property with Peter. In this situation, Peter might have the most success with a/an: - answer-one-party listing All of the following are characteristic of an FHA-insured loan, except: - answer-no downpayment All of the following are exempt from escrow agent licensing requirements, except: - answer-a broker providing escrow services for someone else's transaction All of the following are important components of an inspection report, except: - answer-providing a preliminary value estimate for the property All of the following would show up on a loan applicant's credit report as derogatory credit information, except: - answer-unemployment An agent is preparing a CMA and evaluating possible comparable sales. Which of the following characteristics would most likely make a property unsuitable for use as a comparable? - answer-The property sold just over 12 months ago An agent putting together a listing proposal wants to estimate the property's value. He should: - answer-use the selling prices of comparable properties An agent receives an offer of $350,000 for a property that she has listed for $355,000. When she is about to present the offer to the sellers, another offer comes in. This one is for $300,000. She should: - answer-present both offers at the same time An annual expense is $1,850. Using a 365-day year, what is the per diem rate? - answer-$5.07 An unlicensed real estate assistant may: - answer-provide general information about the broker's services At an open house, a listing agent gives some prospective buyers suggestions regarding how much to offer, without explaining that she is representing the sellers. The agent has: - answer-breached fiduciary duties to both parties At what point in a transaction must you disclose your agency status in writing? - answer-Before or at the same time a party signs a purchase agreement form Before showing properties to a prospective buyer, the agent should: - answer-All of the above Carl agrees to purchase Anna's property, subject to a financing contingency. The contract gives Carl 20 days to fulfill or remove the contingency. However, after 20 days he has provided no notice of having fulfilled it or removed it. At this point, what can Anna do? - answer-Give Carl a notice to perform, informing him that she will terminate the agreement if he does not remove the contingency Disclosure of and consent to a dual agency: - answer-must be in writing For buyers, which of the following is NOT an advantage of having a preapproval letter? - answer-It allows them to look for a home without having to complete a loan application first If a buyer or a seller sues to enforce a purchase agreement, the prevailing party will probably be entitled to: - answer-attorney's fees If a contingency in a purchase agreement is not fulfilled despite a good faith effort to fulfill it, the party who benefits from the contingency may: - answer-Either A or B If a home inspection is desired, which party is responsible for ordering the inspection, and usually also pays for it? - answer-Buyer If a house was built prior to ____, the sellers must disclose information about lead-based paint to prospective buyers. - answer-1978 If a listing agreement contains a safety clause, this offers the broker protection in the event of: - answer-the sale of the property in the period after the listing expires If a property receives a low appraisal, an agent may try to salvage the sale by: - answer-All of the above If an advertisement for a home with financing states the monthly payment amount, what else must be disclosed? - answer-All of the above In a real estate transaction, who is required by law to inspect the property and disclose any material defects observed? - answer-The listing agent and the selling agent In a request for reconsideration of value, you should use: - answer-comparable sales that are at least as similar to the subject property as the appraiser's comparables In choosing a closing date, you should take all of the following into account, except: - answer-how long the buyer needs to save for a downpayment In property management, the primary purpose of a market analysis is to identify the: - answer-appropriate rent schedule In the real estate industry, price fixing issues come up primarily in connection with: - answer-commission rates In the sale of an owner-occupied home for $400,000, the broker accepted a $25,000 deposit from the buyer on the seller's behalf. The buyer breached the contract, and the seller claimed that the buyer had forfeited the deposit. If the liquidated damages provision in the purchase agreement was initialed, the seller: - answer-may retain no more than $12,000 as liquidated damages In which of the following cases would a lender be most likely to decide that the loan applicant's employment income does not qualify as stable income? - answer-The applicant has worked as a machine operator for seven months, after working for an online media company for eight months Income from which of these sources is the least likely to count as stable monthly income? - answer-Unemployment benefits Miguel is a new salesperson for Imperial Realty. Dissatisfied with the lack of mentoring at Imperial, he decides to work for Millennium Real Estate instead and has his license transferred. At the time of the switch, he has two listings. What happens to his listings? - answer-Miguel cannot keep the listings; they belong to Imperial Realty Over the phone, Bill offers Sandy $300,000 for her property. Sandy says that would be acceptable. Bill fills out a purchase agreement form and signs it. Before he can put it in the mail, though, Sandy phones Bill and says that she has accepted a better offer instead. Which of the following is true? - answer-Sandy's acceptance of Bill's offer wasn't in writing, so she may accept another offer without liability to Bill The ability to take full advantage of an investment's appreciation without having to invest the full cost of the investment is a result of: - answer-leverage The buyer has accepted the transfer disclosure statement, and the inspection contingencies have been fulfilled; but the purchase agreement also has a sale of buyer's property contingency clause. At this stage, the buyer would be entitled to a refund of her good faith deposit in each of the following circumstances, except: - answer- The buyer receives the transfer disclosure statement in the mail. How many days does she have in which to rescind the purchase agreement? - answer-5 days from when the statement was deposited in the mail The buyer would be entitled to the return of her good faith deposit in all of the following situations, except: - answer-the buyer is transferred by her employer to a new position in a different city and must withdraw from the transaction The closing date is approaching, but the buyers are still waiting for the loan to be approved. It would be appropriate to address this problem using: - answer-a written extension agreement The difference between the value of a property and the total amount of the liens against it is called: - answer-equity The Hutchinsons own a house that is currently appraised at $545,000. They owe $397,000 on the deed of trust and would have $65,000 in selling expenses. What is their net equity in the property? - answer-$83,000 The parties must separately initial the appropriate paragraph in a purchase agreement if they agree to which form of dispute resolution? - answer-Arbitration The property's sales price is $210,000 and the appraised value is $200,000. The lender won't make a loan with a loan-to-value ratio over 90%. As a result, the maximum loan amount for this transaction is: - answer-$180,000 The seller is allowed to keep the good faith deposit as liquidated damages after a buyer breaches the purchase agreement. Generally, how will the deposit be distributed after costs incurred on the seller's behalf have been paid? - answer-The deposit will be split evenly between the listing broker and the seller The seller of a commercial building is a corporation. Who may sign the purchase agreement to accept the buyer's offer? - answer-An officer of the corporation who has been authorized to sell the property by a resolution of the board of directors The types of businesses operated by tenants are usually of greatest concern to a manager of: - answer-retail property To determine an appropriate listing price for a property, a real estate agent will perform a/an ___, which is related to but less rigorous than a/an ____. - answer-CMA/appraisal To submit a counteroffer that makes several changes, the listing agent should: - answer-use a separate counteroffer form Two brokers in a small community felt that another local broker was unethical and dishonest. They agreed not to send him any referral business, and they encouraged other area brokers to follow their lead. They could be accused of: - answer-a group boycott Under which type of listing will an agent receive a commission only if he is the procuring cause of the sale? - answer- Under which type of listing will the seller owe a commission to the listing agent regardless of who is the procuring cause of the sale? - answer-Exclusive right to sell listing What feature would an ARM include in order to limit how much the borrower's principal balance may increase because the monthly interest accruing is more than the monthly payment amount? - answer-Negative amortization cap What federal law assigns liability for the cleanup of sites contaminated with hazardous waste and also created a fund to facilitate cleanup? - answer-CERCLA What federal law requires the closing agent to withhold a certain percentage of the seller's proceeds and submit that money to the IRS if the seller is not a citizen of t