Illinois Real Estate Practice Exam
A property manager defaulted on a mortgage and the lender foreclosed on the property.
The property sold at the foreclosure sale for less than the loan balance. To recover the
remainder of the money, the lender may: - ANSWER-Obtain a deficiency judgement
On Wednesday, Sam offers to sell his house to Beau for $220,000. On Sunday, Beau
makes a counter offer of $210,000. On Friday, Beau withdraws the counter offer of
$210,000 and accepts Sam's offer of $220,000. In this situation, there is: - ANSWER-No
valid agreement because Beau's counteroffer ended Sam's offer
(Just change one aspect and you kill the contract)
A property buyer obtains a term loan to finance a home purchase. - ANSWER-The
entire loan principal is due at the end of the loan period
Best evidence of marketable title - ANSWER-Title Insurance
Balloon Loan - ANSWER-A borrower has a mortgage loan that requires monthly
payments of $936.25 for 10 years and a final payment of $136,287. Type of loan?
Commingling - ANSWER-Brokers should deposit all earnest money checks they receive
into an escrow account or trust account to prevent being accused.
Conversion - ANSWER-Fancy name for theft
Puffing - ANSWER-Exaggeration of a fact it is legal as long as it doesn't come in as a
fraud
In performing an appraisal of real estate, the appraiser: - ANSWER-Estimates the
property's market value
Objectives of Federal Reserve System - ANSWER-To counteract inflationary and
deflationary trends, to create a favorable economic climate, to maintain sound credit
conditions but NOT to control the secondary mortgage market
Remainder Interest - ANSWER-A fee simple holder of a parcel of real estate grants a
life estate to her daughter and stipulates that upon the daughters death, the property will
pass to her grandson. The second estate is called
Local zoning ordinances are used to regulate - ANSWER-Allowable uses for buildings,
building heights, population density NOT rules for the conducting open spaces
,After paying the brokers fee of 6%, a seller want to net $180,000 from the sale of his
house. What must the property sell for to satisfy both the eh broker and the seller? -
ANSWER-100%-6%=94%=.94
180,000 / .94 = 191489
A property owner constructed a commercial building on the property. Three years later
an ordinance was passed prohibiting commercial buildings in the owners area: -
ANSWER-The building is a nonconforming use
Servient Tenement - ANSWER-The owner of a parcel of land holds an easement right
over an adjoining parcel of land. The parcel of land on which the easement runs is
referred to as the:
Dominant Tenement - ANSWER-Benefits from the servient tenement
What is the amount of real estate tax due on a property with a market value of $140,000
if it is assessed at 30% of market value, has an equalizer of 1.5, and a tax rate of $5.00
per $100.00 of assessed value? - ANSWER-140,000 x .30 = 42,000
42,000 x 1.5 = 63,000
63,000 x .05 = 3150
Easements - ANSWER-Are rights of way on someone else's land
Easement By Necessity - ANSWER-A property owner subdivided a piece of property,
selling the front half and retaining the back half. The back half of the property retained
by the owner does not have access to any roads. The type of easement the courts
might grant in this situation is
Easement In Gross - ANSWER-Utilities
Easement By Prescription - ANSWER-Trespassers rights due for a period of time you
earn 20 years
Easement Appurtenant - ANSWER-For adjacent properties it's a right
Personal Easement In Gross - ANSWER-Individual access to property not transferable
only till alive
Adverse Possession - ANSWER-Squatter Rights 20 years to earn it
License - ANSWER-Personal privilege last for specific period of time
Graduated Payment Loan - ANSWER-Amount goes up after period of time
, Package Loan - ANSWER-A home buyer obtains a loan to finance the purchase of the
house as well as personal property
Blanket Loan - ANSWER-One loan secures multiple properties
Wraparound Loan - ANSWER-New loan pays off old loan
Granting Clause - ANSWER-Is a requirement for a valid deed
(Signature of grantor is needed in Illinois)
An investor purchase an apartment building for $360,000 by paying 10% down and
financing the rest of the purchase price. The lender charge two points as a loan
origination fee. How much was the investor charge for the fee? - ANSWER-360,000 x
.90 = 324,000
324,000 x .02 = 6480
(Discount points are figured on loan & points are 1% of loan amount)
A 55%/45% commission split is agreed to by a selling and listing brokerages. They then
split their share of the commission evenly wit their salespeople. If a house sells for
$190,000 and the commission rate is 6%, how much commission will the selling agent
receive? - ANSWER-190,000 x .06 = 11400
11400 x .55 = 6270
6270 x .50 = 3135
Using the income approach to value, what is the value of an apartment building if it has
gross income of $60,000, operating expenses of $10,000 and a capitalization rate of
8%? - ANSWER-60,000 - 10,000 = 50,000
50,000/.08 = 625,000
One of the provisions of the Truth In Lending Act (TILA) allows for a cooling off period (3
days) in which the loan can be rescinded. The recession provision would apply to which
of the following loan? - ANSWER-Consumer Credit Loan
Title to property is transferred by a deed when the deed is: - ANSWER-Delivered and
accepted by the grantee
(It only needs signature of grantor if you need it in court of law then it needs to be
acknowledged = acknowledgment-notarized signature)
Net Listing - ANSWER-A broker and seller enter into a listing agreement. Under the
terms of the listing, the seller will receive $$ from the sale and with any sales proceeds
over that amount going to the broker. (Fee is above what seller want to net)
Open Listing - ANSWER-Multiple brokerages to sell property
A property manager defaulted on a mortgage and the lender foreclosed on the property.
The property sold at the foreclosure sale for less than the loan balance. To recover the
remainder of the money, the lender may: - ANSWER-Obtain a deficiency judgement
On Wednesday, Sam offers to sell his house to Beau for $220,000. On Sunday, Beau
makes a counter offer of $210,000. On Friday, Beau withdraws the counter offer of
$210,000 and accepts Sam's offer of $220,000. In this situation, there is: - ANSWER-No
valid agreement because Beau's counteroffer ended Sam's offer
(Just change one aspect and you kill the contract)
A property buyer obtains a term loan to finance a home purchase. - ANSWER-The
entire loan principal is due at the end of the loan period
Best evidence of marketable title - ANSWER-Title Insurance
Balloon Loan - ANSWER-A borrower has a mortgage loan that requires monthly
payments of $936.25 for 10 years and a final payment of $136,287. Type of loan?
Commingling - ANSWER-Brokers should deposit all earnest money checks they receive
into an escrow account or trust account to prevent being accused.
Conversion - ANSWER-Fancy name for theft
Puffing - ANSWER-Exaggeration of a fact it is legal as long as it doesn't come in as a
fraud
In performing an appraisal of real estate, the appraiser: - ANSWER-Estimates the
property's market value
Objectives of Federal Reserve System - ANSWER-To counteract inflationary and
deflationary trends, to create a favorable economic climate, to maintain sound credit
conditions but NOT to control the secondary mortgage market
Remainder Interest - ANSWER-A fee simple holder of a parcel of real estate grants a
life estate to her daughter and stipulates that upon the daughters death, the property will
pass to her grandson. The second estate is called
Local zoning ordinances are used to regulate - ANSWER-Allowable uses for buildings,
building heights, population density NOT rules for the conducting open spaces
,After paying the brokers fee of 6%, a seller want to net $180,000 from the sale of his
house. What must the property sell for to satisfy both the eh broker and the seller? -
ANSWER-100%-6%=94%=.94
180,000 / .94 = 191489
A property owner constructed a commercial building on the property. Three years later
an ordinance was passed prohibiting commercial buildings in the owners area: -
ANSWER-The building is a nonconforming use
Servient Tenement - ANSWER-The owner of a parcel of land holds an easement right
over an adjoining parcel of land. The parcel of land on which the easement runs is
referred to as the:
Dominant Tenement - ANSWER-Benefits from the servient tenement
What is the amount of real estate tax due on a property with a market value of $140,000
if it is assessed at 30% of market value, has an equalizer of 1.5, and a tax rate of $5.00
per $100.00 of assessed value? - ANSWER-140,000 x .30 = 42,000
42,000 x 1.5 = 63,000
63,000 x .05 = 3150
Easements - ANSWER-Are rights of way on someone else's land
Easement By Necessity - ANSWER-A property owner subdivided a piece of property,
selling the front half and retaining the back half. The back half of the property retained
by the owner does not have access to any roads. The type of easement the courts
might grant in this situation is
Easement In Gross - ANSWER-Utilities
Easement By Prescription - ANSWER-Trespassers rights due for a period of time you
earn 20 years
Easement Appurtenant - ANSWER-For adjacent properties it's a right
Personal Easement In Gross - ANSWER-Individual access to property not transferable
only till alive
Adverse Possession - ANSWER-Squatter Rights 20 years to earn it
License - ANSWER-Personal privilege last for specific period of time
Graduated Payment Loan - ANSWER-Amount goes up after period of time
, Package Loan - ANSWER-A home buyer obtains a loan to finance the purchase of the
house as well as personal property
Blanket Loan - ANSWER-One loan secures multiple properties
Wraparound Loan - ANSWER-New loan pays off old loan
Granting Clause - ANSWER-Is a requirement for a valid deed
(Signature of grantor is needed in Illinois)
An investor purchase an apartment building for $360,000 by paying 10% down and
financing the rest of the purchase price. The lender charge two points as a loan
origination fee. How much was the investor charge for the fee? - ANSWER-360,000 x
.90 = 324,000
324,000 x .02 = 6480
(Discount points are figured on loan & points are 1% of loan amount)
A 55%/45% commission split is agreed to by a selling and listing brokerages. They then
split their share of the commission evenly wit their salespeople. If a house sells for
$190,000 and the commission rate is 6%, how much commission will the selling agent
receive? - ANSWER-190,000 x .06 = 11400
11400 x .55 = 6270
6270 x .50 = 3135
Using the income approach to value, what is the value of an apartment building if it has
gross income of $60,000, operating expenses of $10,000 and a capitalization rate of
8%? - ANSWER-60,000 - 10,000 = 50,000
50,000/.08 = 625,000
One of the provisions of the Truth In Lending Act (TILA) allows for a cooling off period (3
days) in which the loan can be rescinded. The recession provision would apply to which
of the following loan? - ANSWER-Consumer Credit Loan
Title to property is transferred by a deed when the deed is: - ANSWER-Delivered and
accepted by the grantee
(It only needs signature of grantor if you need it in court of law then it needs to be
acknowledged = acknowledgment-notarized signature)
Net Listing - ANSWER-A broker and seller enter into a listing agreement. Under the
terms of the listing, the seller will receive $$ from the sale and with any sales proceeds
over that amount going to the broker. (Fee is above what seller want to net)
Open Listing - ANSWER-Multiple brokerages to sell property
