REAL ESTATE FINAL EXAM QUESTIONS AND CORRECT ANSWERS

REAL ESTATE FINAL EXAM QUESTIONS AND CORRECT ANSWERS "A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15, when did the listing expire? - CORRECT ANSWER 6/15" "The sellers listed their property for six months on February 26 for $522,500. They agreed to pay the listing broker a 7% commission at closing on the agreed upon sale price. A buyer made an offer on the property on March 29 for $510,000. The seller countered the offer on April 1 at $517,500, and the buyer accepted the counter offer with the closing to occur on June 15. How much commission did the seller owe the listing broker, and how would it appear on the settlement statement? - CORRECT ANSWER $36,225. Debit the seller." "The discount points charged by a lender on a federal VA or FHA loan are a percentage of the - CORRECT ANSWER loan amount." "An increase in the availability of money would lead to which effect? - CORRECT ANSWER Interest rates would go down." "When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called - CORRECT ANSWER a balloon payment." "In an installment land contract, what type of title did the seller retain? - CORRECT ANSWER Legal" "Which of the following is true of a second mortgage? - CORRECT ANSWER It is usually issued at a higher rate of interest." "Usury MOST nearly means - CORRECT ANSWER illegal interest." "A borrower bought a $174,000 house with no down payment. The loan was probably - CORRECT ANSWER a VA loan." "A house sold for $420,000. The buyer made a 20% down payment. Monthly interest on the loan was $1,400. What was the interest rate on the loan? - CORRECT ANSWER • 5%" "Which of the following describes a mortgage that requires principal and interest payments at regular intervals and is called the liquidation of debt by periodic installment until the debt is satisfied? - CORRECT ANSWER Amortized loan" "Which is the most common form of mortgage? - CORRECT ANSWER Amortized loan" "Under RESPA, a copy of Real Estate Settlement Costs And You must be given - CORRECT ANSWER at the time of loan application, or within 3 days of application." "The primary purpose of Truth in Lending is to - CORRECT ANSWER disclose the true costs of obtaining credit." "Why is the RESPA closing statement allowed to be examined on or before closing? - CORRECT ANSWER To check for mathematical errors" "Why would a mortgagee have an appraisal on the property? - CORRECT ANSWER To assure the property value is sufficient to cover the loan" "Seller Jolita lists her house with Broker Fred. Fred then buys Jolita's house and collects the agreed-upon commission. This is an example of - CORRECT ANSWER self-dealing." "An owner was selling his own home. Can he advertise the down payment? - CORRECT ANSWER Yes, because it was his own home." "Which is true about restrictive covenants? - CORRECT ANSWER They are placed by private parties in a deed." "Looking at shopping centers in the appraisal process, the social fiber of the community and distances from schools is called - CORRECT ANSWER neighborhood analysis." "Which best describes why a buyer purchases a home using the market data approach? - CORRECT ANSWER Buyers buy after they compare the house with others." "How many feet in one yard? - CORRECT ANSWER 3 feet in one yard" "A scale drawing shows a room to be 3 inches by 4-1/2 inches. Carpet, which is $15 per square yard, is to be installed in the room. If the scale is 1 inch to 4 feet, how much would it cost to install the carpet? - CORRECT ANSWER $360" "A tenant leased 3,000 square feet at $10 per square foot and 8% of gross income. The total annual rent she paid was $60,000. What was the gross income on which she paid percentage rent? - CORRECT ANSWER $375,000" "The Rose family owns a home in a semi-rural area, which is about five years old. Recently announced plans for a new regional airport will place their home directly in line with a main runway ending 1 mile before their home. If the airport is constructed, will this diminish the value of the Rose Home? - CORRECT ANSWER Yes, because of economic obsolescence." "Mrs. Jones, an appraiser, is appraising a single family residence for which she has located six closely comparable properties, all sold within the past six months. The subject property is rented for $1,500 per month. It is a custom-built home, approximately three years old. Mrs. Jones would probably give the most weight in her final estimate of value to which of the following appraisal methods? - CORRECT ANSWER Market data approach" "Which is the best example of functional obsolescence? - CORRECT ANSWER A house with no electricity or running water" "* What is an arm's length transaction? - CORRECT ANSWER One in which both parties have the ability to negotiate." "For the past 30 years, the Lois has operated a neighborhood grocery store. Last week the city council passed a zoning ordinance that prohibits packaged food sales in the area where the Lois's grocery store is located. The store is now an example of a/an - CORRECT ANSWER nonconforming use." "With how many states does Florida have a reciprocal, or mutual recognition agreement with? - CORRECT ANSWER 8 states" "* Name the 8 states that Florida has a reciprocal, or mutual recognition agreement with? - CORRECT ANSWER Alabama, Arkansas, Connecticut, Georgia, Indiana, Mississippi, Nebraska and Oklahoma." "At age 18, Leslie is considering what to do when she graduates from high school in 9 months. Can she begin taking prelicense coursework during her final year of high school? - CORRECT ANSWER Yes, but she cannot be licensed until she receives her high school diploma." "* What must a listing agreement include? - CORRECT ANSWER a definite expiration date, include a description of the property, and specify the fee or commission." "What type of Acts were developed to make laws aimed at controlling zoning and property use? - CORRECT ANSWER Enabling Acts" "What Florida Act was initiated to limit urban sprawl and encourage a more compacted development of land use? - CORRECT ANSWER The Growth Management Act" "Mario signed an exclusive listing with Paula to sell his apartment complex. After a few weeks Mario cancelled the listing agreement and contacted an auction house to turn the property quickly. Paula feels she is owed a commission. Is she correct? - CORRECT ANSWER No, because Paula did not meet the conditions for payment of commission before the cancellation of the agreement." "What are the goals of planning and zoning? - CORRECT ANSWER savings of tax money by preventing urban sprawl; adequate provisions of services such as fire, police and libraries; providing for road right-of-ways and set backs; protection against costly drainage, flooding or environmental problems; protection for the public from harm in building; reduction in political and equity problems in landfills, prisons etc.; reduction in cost for major catastrophes such as earthquakes, tornados and fire." "Beth wanted a new entrance sign to her brokerage. She took the old sign down, but following a problem with the supplier, after 2 months still hadn't put up a new one. Beth received a citation for not having a proper entrance sign displayed. If Beth wants to dispute the citation which of the following is TRUE? - CORRECT ANSWER Beth may dispute the citation within 30 days of being served." "John has been farming his land in Florida for nearly 22 years. His principal crops are cabbage and oranges. He also raises pigs and horses for sale on his 280-acre property. He has consistently used conservation methods and fertilizing to maintain the value of the land. He has also reforested where possible on his property. He is currently seeking some tax relief. Is he likely to get relief? - CORRECT ANSWER Yes, because his property falls under the Florida Green Belt Law." "***What is the Florida Green Belt Law? - CORRECT ANSWER This taxes agricultural land at a lower rate than the encroaching cities around the land, and preserves the land for future agricultural use." "Wilma accepted an offer on her home from a buyer who provided a $3,500 earnest money deposit, but thereafter neither she nor her broker heard from the buyer. What is the most accurate way the broker should handle this situation and the $3,500? - CORRECT ANSWER The broker must notify the Commission within 15 business days that he has a good-faith doubt." "Moe relocated from Brooklyn to Florida, qualified for a Florida broker's license and opened a small office in Palm Beach. His family back in Brooklyn say he should open an office in Brooklyn too. Could Moe do this legally? - CORRECT ANSWER Yes, there is no law that prohibits a broker in Florida from having an office out of state as long as all of his escrow funds are held in trust by a Florida bank or credit union." "Lane, a broker, listed a small cottage near the causeway at $250,000, but the seller finally had to accept an offer of only $230,000. When Lane met with the parties, both the buyer and her client asked her to prepare a second contract in the amount of $250,000 "so the mortgage company will give us a higher loan." Is there anything wrong with Lane following his client's and the buyer's wishes? - CORRECT ANSWER Yes, it is illegal to enter into a dual contract for the purpose of securing a larger loan." "If the board determines a proposed site does not conform with existing land use plans and zoning ordinances, what steps may the board take? - CORRECT ANSWER Authorize a variance to the land use plan and zoning ordinances to bring the proposed site into line with the existing local land use plans and zoning ordinances." "Broker Marge was swamped, and asked Jilly and Kelly to help with 1 of her clients. Jilly is a non-licensed secretary and Kelly is a real estate licensee working in a non-representative role with the seller. Who could help Marge and provide the seller with a comparative market analysis (CMA)? - CORRECT ANSWER Kelly could. There is no restriction to prevent a licensee from preparing a CMA for a buyer or seller." "Eve and her husband Adrian have homesteaded property. Adrian owns investment real estate in severalty and has expressed his desire that his investment property would go to his friend Rex. When Adrian dies testate, which of the following statements is TRUE regarding the situation? - CORRECT ANSWER Eve automatically has 100% interest/ownership in the principal residence. She may also file for an elective share of the investment property. Rex would be entitled to the investment property by reason of the testate." "When Theresa's neighbor Joe died, his son informed Theresa that he was going to enforce the easement he and Joe had running along the back edge of Theresa's property. Theresa said that since Joe hadn't enforced it in 18 years, he had lost the right because the easement automatically terminated in that amount of time. Was she correct? - CORRECT ANSWER No, Theresa was wrong. It takes 20 consecutive years without interruption before the easement may be terminated." "Millie and Britt have owned 2 homes for the past 7 years, 1 in Manhattan and 1 in Tampa. 6 years ago they separated, and Millie decided to stay in Manhattan, with Britt electing to live in Tampa. They now want to sell the house in Manhattan and buy Millie a condo. Can Britt and Millie exclude up to $500,000 of gain when they sell the home? - CORRECT ANSWER No, taxpayers are allowed to exclude $250,000 ($500,000 for joint filers) of gain on the sale or exchange of a home if it was owned and used as the taxpayer's principal residence for 2 of the 5 years preceding the sale. Both Britt and Miller must have lived in and used the home to qualify for the $500,000 exclusion." "What are the 5 major zoning classifications of property? - CORRECT ANSWER residential; commercial; industrial; agricultural; special purpose property." "Salesperson Jerri helped her sister Summer get a job with Calhoun Title Company. As a way of saying thanks, Summer sends Jerri a $200 referral fee from the Title Company for every transaction that Jerri closes through Calhoun Title. Knowing Florida real estate law, Jerri had a lawyer friend add a phrase in her sale and purchase documentation stating that the buyer "agrees to use Calhoun Title Co." Which of the following statements is accurate regarding this situation? - CORRECT ANSWER Florida law prohibits a title company from paying a referral fee to anyone recommending the use of its services, or as a reward for those who do." "A sales associate is selling her home and wants to promote it through her firm while acting as the sales agent. What must she include in any advertisements? - CORRECT ANSWER The sales associate's name and the broker's must be displayed on the same sign or ad." "When a licensee moves from the state of Florida to another state, what must they do? - CORRECT ANSWER Notify the Department of Business and Professional Regulation of a change in residency within 10 days." "When Ang, owner and principal broker for ABC Realty, helped his niece Seria purchase a property, he did not have Seria sign a disclosure form. According to Florida law, what kind of brokerage relationship will Ang have with his niece? - CORRECT ANSWER Because no brokerage relationship was established in writing with his niece, Ang was operating as transaction broker. He violated the law that was in effect at that time by not disclosing his broker relationship." "Rita fell in love with a home built in 1905. She was surprised when the listing broker gave her a lead-based paint disclosure form at closing. Which of the following is TRUE? - CORRECT ANSWER The law says the seller may not accept an offer from the buyer unless both the Lead-based Paint Disclosure and EPA pamphlet have been given. If the seller fails to give the disclosure and pamphlet to the buyer, the broker is responsible for doing so." "When Rex obtained his Florida sales associate license he misrepresented the facts and concealed that his insurance license in another jurisdiction had been revoked more than 20 years before. Which of the following is a mandated penalty according to Florida law? - CORRECT ANSWER There is a mandated $1,000 administrative fine, and Rex's license will be revoked." "What is the acronym for the process of adverse posession to take place in Florida? - CORRECT ANSWER P.O.A.C.H." "*** What does P.O.A.C.H. stand for? - CORRECT ANSWER Posession, Open, Actual, Continuous, Hostile." "Eldon arrived in Coral Gables and found the perfect apartment. He signed a written agreement with the property owner, but the contract had no date of termination. Which of the following most accurately describes Eldon's situation? - CORRECT ANSWER Eldon has a valid contract. The owner did not violate the law. The owner is only obligated under this scenario to give Eldon at least 15 days' notice plus the payment period to vacate prior to the end of the monthly period." "A buyer is visiting open houses and runs across a nice looking home for sale. Can the listing agent show the buyer the home? - CORRECT ANSWER Yes, as long as the listing agent gives the buyer an agency disclosure notice which states he represents the seller." "Which best describes a subagent? - CORRECT ANSWER A seller hires A1 Realty to sell his property. The broker at A1 lists the property and a broker at Sun Realty brings a buyer but does NOT represent the buyer." "A mortgage in Florida may not contain both a prepayment penalty clause and which of the following? - CORRECT ANSWER A due-on-sale clause" "Private home ownership in Florida is subject to which of the following? - CORRECT ANSWER Government interference called P.E.T.E. (Police Power, Eminent Domain, Taxation, Escheat.)" "After failing his Florida licensing exam Doug decided to change his career path and began working as an administrator for the FHA. With FHA approval, Doug gave lists of foreclosed properties to broker Paige, under the provision that Paige would pay him a percentage of commissions earned by her company on properties from that list. Which of the following is TRUE? - CORRECT ANSWER Paige is violating the law because she is agreeing to pay compensation to an individual who is not licensed." "Beacon Real Estate has signed agency agreements with the Platts and the Browns. The Browns like the Platts' home and want to make an offer. Can Providence represent both parties? - CORRECT ANSWER No, because no Florida real estate broker may act as a dual agent." "A broker has just secured a new listing. If he wants to erect a "For Sale" sign on the property, what must he do first? - CORRECT ANSWER The broker must get the property owner's permission to do so." "What is the correct term for a Florida real estate licensee working under the direction of a broker? - CORRECT ANSWER Real estate sales associate" "A sales associate, Jose, entered agency agreements with both the Cunninghams (sellers) and Marissa (buyer). Jose helped Marissa write an offer for $5,000 less than the asking price and presented it to the Cunninghams. Jose pressured the Cunninghams to accept the lower offer since the house had been on the market for 3 months with little interest. Is this allowable? - CORRECT ANSWER No, Jose is working as a transaction broker and is acting unfairly towards the Cunninghams." "When applying for the Florida real estate licensure examination, what does a candidate need to submit? - CORRECT ANSWER An authenticated application; digital fingerprint data; the appropriate fee(s)" "In Florida can a real estate agent list a property for sale based on the "net price"? - CORRECT ANSWER Yes, net listings are legal in Florida." "Which of the following brokers is in violation of the recent updates to Florida statutes regarding brokerage offices? Which of the following is in violation of brokerage office and sign requirements? - CORRECT ANSWER Broker Alana has her office in her condominium. The condo association prohibits owners from displaying any materials on their doors, so Alana has her business sign posted on the inside of her condo door, which is visible to clients as soon as they enter." "Cody bought a house in the fall which was found to have a leaky roof during the following spring's rainstorms. The sellers had discussed the roof leaks with transaction broker, but the transaction broker decided not to divulge those details to the Cody and now claims Cody did not specifically ask about the roof. Which is TRUE? - CORRECT ANSWER The broker can be held responsible for not sharing information about the roof with Cody." "Valencia, a real estate sales associate, is developing a website to promote her services. Which of the following CAN she post on her site? - CORRECT ANSWER An old house needs a lot of refurbishment including updating fixtures, exterior and interior painting and repairs to flooring. Valencia lists this property in the bargain section of her website, calling it a "fixer upper - perfect for an owner with home repair skills."" "To comply with the statutes, which of the following actions must broker Haley take when she moves her office from Winter Park to Sanford? - CORRECT ANSWER She must notify the Commission within 10 days of her change of address by sending the required form along with a list of licensees no longer associated with the firm." "What is an accepted practice when it comes to managing a sales escrow account? - CORRECT ANSWER The statutes allow brokers to maintain up to $5,000 of personal or brokerage funds in a property management escrow account or up to $1,000 in a sales escrow account. In the case of errors, brokers are provided a reasonable time to correct errors and authorized disbursements may still occur." "A broker has had his license suspended for misrepresentation. Which of the following is TRUE? - CORRECT ANSWER All of his affiliated licensees will become involuntarily inactive." "Can a successful sales associate who is ambitious to generate new business, place a series of advertisements in the newspaper? - CORRECT ANSWER Yes, if his broker approves and the ads carry the name of the firm or broker in addition to the sales associate's." "A broker has had his license suspended for failure to properly market his listings. The Whitfields obtain a civil court judgment against him for the damages resulting from his action. Which of the following represents the maximum Recovery Fund payment authorized by the updated statutes for this situation? - CORRECT ANSWER $50,000" "* What is the maximum payment from the Recovery Fund to 1 person or from 1 transaction? - CORRECT ANSWER $50,000" "What are the maximum aggregate payment from the Recovery Fund for multiple claims against a single licenseeis? - CORRECT ANSWER $150,000" "With regards to the 2003 changes to the Florida Statutes, which of the following limitations has been placed on FREC in the collection of fees for the Recovery Fund? FREC can assess fees - CORRECT ANSWER until the Recovery Fund reaches $1 million." "A sales associate decides to sell his own property without using a broker. Which of the following is TRUE regarding any advertising the sales associate may wish to do? - CORRECT ANSWER The sales associate must disclose the fact that he is a real estate licensee." "Which of the following is considered a material fact that MUST be disclosed per the Florida statutes? - CORRECT ANSWER While the owner was restaining his deck, the staircase crumbled due to termite activity." "With regards to appraisal services, which of the following holds TRUE? - CORRECT ANSWER The law allows brokers and sales associates to provide valuation services for compensation as long as they do not represent themselves as appraisers." "A real estate licensee is acting as a transaction broker facilitating the sale of a commercial building. Which of the following is correct regarding transaction brokerage in Florida? - CORRECT ANSWER Neither party is required to sign the broker disclosure notice if the broker is acting as a transaction broker." “A real estate licensee has a buyer agency agreement. What is the seller in this situation? - CORRECT ANSWER A customer." "An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform? - CORRECT ANSWER He must exercise his option under the terms of the option contract." "When can a landlord evict a disabled blind or disabled tenant from the premises? - CORRECT ANSWER If the tenant has loud parties, makes too much noise, and is constantly disturbing other tenants" "4. Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker? - CORRECT ANSWER There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer." "A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executed contract. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage? - CORRECT ANSWER Enforceable" "6. The seller and the buyer finally agreed to a purchase price of $203,500 with the closing to occur on June 15. The taxes for the year in the amount of $2,500 have not been paid by the seller. (Taxes are paid in arrears). How much would the tax proration amount to, and how would it appear on a full settlement statement? Base your answer on a 365 day year, and the buyer is responsible for the day of settlement. - CORRECT ANSWER $1,130.14 debit the seller and credit the buyer" "The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June 15. The seller's loan balance after the June 1 payment was $170,000. with an interest rate of 6%.The monthly payment was $1,800 principal and interest. What was the loan balance the day of closing, and how much interest did the seller owe the bank? - CORRECT ANSWER Loan balance $170,000; interest due $425" "The buyer and seller agreed to a purchase price of $310,500. The buyer received an 80% loan. How much was the buyer's loan and how did it appear on the settlement statement? - CORRECT ANSWER $ 248,400. Credit the buyer only." "A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? - CORRECT ANSWER Friday, midnight (Three business day period)" "The seller under a land contract is called - CORRECT ANSWER The vendor" "On an 8% straight term loan of $6,071, the borrower paid total interest of $1,700. How long did he have the loan? - CORRECT ANSWER 42 months" "Are recording fees and title insurance premiums part of the Truth in Lending statement? - CORRECT ANSWER No, These are considered legal, not financing fees and therefore are not part of the Truth in Lending statement." "A mortgage broker - CORRECT ANSWER arranges loans between borrowers and investors." "The Smiths' purchased a residence for $750,000. They made a down payment of $150,000 and agreed to assume the seller's existing mortgage, which had a current balance of $230,000. The Smiths' financed the remaining $370,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a - CORRECT ANSWER part purchase mortgage" "On a $500,000 loan the borrower is required to pay two points. How much does the borrower have to pay the lender? - CORRECT ANSWER $510,000.00" "Which of the following is a closing expense paid by the seller? - CORRECT ANSWER The broker's commission" "An impound or reserve account MOST benefits whom? - CORRECT ANSWER The lender" "What are impound or reserve accounts also known as? - CORRECT ANSWER Escrow accounts" "The HUD-1 form is - CORRECT ANSWER a statement of actual charges and adjustments." "A VA loan may be granted for the purchase of a one-family to four-family property if - CORRECT ANSWER the veteran agrees to live there." "Which of the following would usually occur in a sale-and-leaseback transaction? - CORRECT ANSWER The property is sold on the condition that the new owner lease it back to the seller at the time title passes." "A standardized yardstick expressing the true annual cost of borrowing is expressed as the what? - CORRECT ANSWER APR" "RESPA would prohibit which of the following acts? - CORRECT ANSWER A: paying of kickbacks Illumination: RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited." "In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called? - CORRECT ANSWER Statutory right of redemption" "The lender is required, under RESPA, to provide a detailed "Good Faith Estimate (GFE)" statement at the time of loan application or within three business days to - CORRECT ANSWER the buyer." "In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? - CORRECT ANSWER Secondary market" "Though 30 year loans are more common, 15 year loans are considered standard, conventional loans. - CORRECT ANSWER Yes." "Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? - CORRECT ANSWER Monthly payments" "Who are graduated payment mortgages aimed to> - CORRECT ANSWER Particularly at young families who expect to see their earnings rise over the next five to ten years." "The maximum permissible "loan to value ratios" are - CORRECT ANSWER based on sale price or appraised value, whichever is lower." "Are there any state-mandated qualifying requirements for conventional loans? - CORRECT ANSWER No, Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender." "A buyer wants to take out an FHA loan. The broker should refer the buyer directly to - CORRECT ANSWER any approved lending institution such as a bank or savings and loan association." "An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be in violation of the Truth in Lending Act? - CORRECT ANSWER No. Owners are not covered by Regulation Z." "What is Regulation Z? - CORRECT ANSWER is the part of the Truth in Lending Act of 1968 that promulgates rules that protect consumers against misleading practices by the lending industry." "A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called - CORRECT ANSWER warehousing." "If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent's income is from child support? - CORRECT ANSWER If the parent was relying on the income for repayment of the loan" "When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it? - CORRECT ANSWER The trustor" "Trustor is another name for? - CORRECT ANSWER Borrower" "The Pickets are purchasing a home for $780,000 and the lender is giving them a 90% loan at 5% interest, plus a 2% loan origination fee. How much is the loan origination fee? - CORRECT ANSWER $14,040" "Discrimination is prohibited in lending practices under - CORRECT ANSWER ECOA" "A buyer assumes the mortgage. How is the owner relieved of the liability? - CORRECT ANSWER Novation" "Which type of loan will result in the largest reduction of the principal balance most quickly? - CORRECT ANSWER 6% over 15 years" "Who is the largest purchaser in the secondary market? - CORRECT ANSWER Fannie Mae" "What does Fannie Mae stand for? - CORRECT ANSWER Federal National Mortgage Association" "Which transaction requires a securities license? - CORRECT ANSWER Selling shares in Fannie Mae" "Who is NOT an originator of primary loans? - CORRECT ANSWER FHA" "A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this? - CORRECT ANSWER Yes. This is acceptable as long as the seller agrees." "If advertised alone, which would be in violation of Truth in Lending? - CORRECT ANSWER "No down payment required."" "A real estate agent should tell the buyer, his customer, which of the following? - CORRECT ANSWER A pending or recent zoning change" "A square is 1/8 of a mile by 1/8 of a mile. How many acres is this? - CORRECT ANSWER 10 acres One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres" "The first step in an appraisal is - CORRECT ANSWER to Define the problem" "A recorded subdivision plat is used in the - CORRECT ANSWER lot and block system." "An appraiser is usually paid - CORRECT ANSWER a fee based on the amount of time and effort." "The primary survey line running north and south in the rectangular survey system is the - CORRECT ANSWER principal meridian." "The zoning commission of Jefferson County requires that all new construction in a specific area adhere to a specific type of architecture. What type of zoning is this? - CORRECT ANSWER Aesthetic" "The appraisal approach most likely to be used in valuing a public library building would be - CORRECT ANSWER cost." "Physical deterioration is considered curable whenever - CORRECT ANSWER it costs less to correct than the resulting value increase." "The economic life of an investment can be described as - CORRECT ANSWER the time over which value generated exceeds cost of operation." "When an appraiser correlates the three approaches into a final estimate, he - CORRECT ANSWER reconciles the differences according to the type of property being appraised and the quantity and quality of data available." "Apartment houses in an area were selling for $100,000 and a buyer offered $100,000 for an apartment building. The buyer is operating on the principle of - CORRECT ANSWER substitution." "A feature found in a comparable property that is not present in the subject property will result in - CORRECT ANSWER a reduction adjustment to the comparable's selling price." "Can brokers provide Legal Advice? - CORRECT ANSWER No, Brokers should not provide legal advice unless they are also a lawyer." "When an appraiser uses the phrase "effective age," he is referring to - CORRECT ANSWER the age of the property based upon its condition." "The Adams family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the monetary value of the home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of - CORRECT ANSWER regression." "In valuing a single family residence by the comparison approach, an appraiser would make adjustments to - CORRECT ANSWER the comparable properties." "Some expenses paid at closing must be __________ between the buyer and the seller. The most common items that fall into this category include taxes, insurance, and utilities. - CORRECT ANSWER prorated" "How does one determine the gross rent multiplier? - CORRECT ANSWER Property value divided by the monthly rent" "Restrictive covenants that run with the land - CORRECT ANSWER apply to and bind all successive owners of the property." "In doing a market analysis, an appraiser found a recently sold property where the owners had just gone through a divorce. The property had been listed for $260,000 for 3 months but was purchased for $170,000 by one of the spouses. Should the appraiser use this as a comparable? - CORRECT ANSWER No--because of the divorce it was not an "at arms' length" transaction." "After a long dispute with a bankrupt and corrupt Florida broker, the Gonzalez family was awarded a judgment for $12,500 in actual damages and $87,500 in punitive damages, for a total of $100,000. They were then surprised find that the Real Estate Recovery Fund would not cover all $100,000. Which of the following is TRUE? - CORRECT ANSWER The Real Estate Recovery Fund is expressly limited to only actual, not punitive damages. Therefore only $12,500 would be available for recovery in this case." "Ralph is a sales person with Sunlight Real Estate Brokers and when he shows his client Ben a property listed by Xavier Realty, Ben decides to make an offer on the property. Ralph notices that Ben has written the earnest money deposit check to be made payable to the wrong name. Which of the following statements accurately describes the error and ideal corrective action? - CORRECT ANSWER Because Ben wrote the check payable to Ralph, Ralph should return the check to Ben and request he make out a new check." "Marhall has a court order against a bankrupt broker for $75,000 in damages caused by the broker's misconduct. How much will Marshall receive from the Recovery Fund? - CORRECT ANSWER $50,000" "Alejandro is a salesperson at Rococo Real Estate Brokerage in Pensacola. While visiting his daughter in Daytona, Alejandro sees a property offered by Daytona Diligent Realty which he proceeds to sell to a client back in Pensacola. Alejandro receives 5% commission from Daytona Diligent Realty. Is there anything wrong with this situation, and if so, what is the key legal condition? - CORRECT ANSWER Yes, Alejandro and Daytona Diligent Realty are in violation of Florida's real estate license law.***** (Alejandro may only be compensated by his broker, Rococo Real Estate, so any offer of commission or fee made directly by Daytona Diligent Realty must be refused. Both parties are in violation of Florida's real estate license law.)"