WA State Real Estate Exam Prep: Rockwell
| | | | | | |
Institute Exam multiple choice questions | | | | |
with verified solutions & Rationales | | | |
A home inspection revealed that black mold is present in a home. What should
| | | | | | | | | | | | | |
the buyer's agent tell the buyer?
| | | | | |
A. That black mold is toxic, and that the buyer should not buy the house
| | | | | | | | | | | | | |
B. That mold is commonplace, and can be cleaned up with bleach
| | | | | | | | | | |
C. To require the seller to remedy the problem
| | | | | | | |
D. To seek expert advice - Correct answer ✔answer:
| | | | | | | | |
D: seek expert advise
| | |
A buyer's agent typically does not have expertise in environmental hazards. The
| | | | | | | | | | | |
proper step, for the matters in a transaction outside the agent's expertise, is to
| | | | | | | | | | | | | |
advise the principal to seek expert advice. In this case, that would be a mold
| | | | | | | | | | | | | | |
remediation specialist. |
A seller wants to net $60,000 from a transaction, but will have to pay off a
| | | | | | | | | | | | | | | |
mortgage and other fees, at a total cost of $181,800. The seller will also need to
| | | | | | | | | | | | | | | |
pay a 7% commission. What will the property need to sell for?
| | | | | | | | | | | |
A. $241,800
|
B. $258,726
|
,C. $260,000
|
D. $276,060 - Correct answer ✔Answer:
| | | | | |
C: $260,000
|
Start by adding the desired net and the other cost, including the mortgage
| | | | | | | | | | | | |
($60,000 + $181,800 + $241,800). | | | | |
Subtract the commission percentage from 100% (100% -7%=93%)
| | | | | | |
Then divide the total by that percentage ($241,800 / .93 = $260,000)
| | | | | | | | | | |
Since the agent bases her commission on the total selling price, you can't simply
| | | | | | | | | | | | |
add 7% of the costs and profit to the selling price or you wont quite have her full
| | | | | | | | | | | | | | | | | |
commission. You need a price that the agent can take 7% from and still satisfy
| | | | | | | | | | | | | | | |
the seller's goals. A fuller explanation is found in the section on seller's net
| | | | | | | | | | | | | |
problems in ch. 18 of Fundamentals. | | | | |
A buyer asks the buyer's agent to write an offer on terms that don't match the
| | | | | | | | | | | | | | | |
listing agreement. The buyer's agent refuses to write the offer and then, in
| | | | | | | | | | | | |
writing, unilaterally terminates the agency relationship with the buyer. Which
| | | | | | | | | |
is true?
|
A. Buyer's agent will be subject to disciplinary action
| | | | | | | |
B. Buyer's agent is permitted to unilaterally terminate the agency relationship
| | | | | | | | | |
C. Buyer's agent is allowed to terminate the agency, but must write the offer
| | | | | | | | | | | | | |
before terminating |
D. Buyer's agent is not permitted to write such an offer - Correct answer
| | | | | | | | | | | | | |
✔answer:
,B. Buyer's agent is permitted to unilaterally terminate the agency relationship
| | | | | | | | | |
An agent may unilaterally renounce an agency relationship. Termination of the
| | | | | | | | | | |
agency may involve a breach of contract; if so, the agent could be liable to the
| | | | | | | | | | | | | | | |
principal for damages resulting from the breach. However, breach of contract
| | | | | | | | | | |
isn't in itself grounds for disciplinary action. Failure to present an offer is
| | | | | | | | | | | | |
grounds for disciplinary action; but here, since the agent didn't write the offer,
| | | | | | | | | | | | |
no offer exists yet. (An agent is free to renounce rather than help the principal
| | | | | | | | | | | | | | |
do something pointless or unwise.)
| | | |
Closing is set for August 1. The seller has already paid the property taxes for the
| | | | | | | | | | | | | | | |
year, totaling $6,000. How much of that amount is the buyer's responsibility?
| | | | | | | | | | |
A. $2,000
|
B. $2,500
|
C. $3,000
|
D. $3,500 - Correct answer ✔answer
| | | | |
B: $2,500
|
Since the buyer is taking title on August 1, she's responsible for the property
| | | | | | | | | | | | | |
taxes for the remaining five months of the year (August, September, October,
| | | | | | | | | | | |
November, and December). Divide the annual taxes by 12 to find the monthly | | | | | | | | | | | | |
amount: $6, - $500. Multiply that figure by 5 to determine the buyer's
| | | | | | | | | | | | | | |
share of taxes: 5 x $500 = $2500 (Generally the state will tell you when to treat
| | | | | | | | | | | | | | | | |
all months as equal, but here even set of dollar amounts in the answers lets you
| | | | | | | | | | | | | | | |
know that) |
, The IRS issues rules that determine when a real estate agent is an employee and
| | | | | | | | | | | | | |
when he is an independent contractor. Which of the following statements on
| | | | | | | | | | | | |
that topic is FALSE? | | |
A: The brokerage may allow an independent contractor to place her own ads
| | | | | | | | | | | | |
but the ads must conform with the firm's advertising rules
| | | | | | | | | |
B. The brokerage may require an independent contractor to have a cell phone
| | | | | | | | | | | |
C. The brokerage will take taxes from an employee's paycheck
| | | | | | | | |
D. The brokerage will tell an employee when to work certain hours - Correct
| | | | | | | | | | | | | |
answer ✔answer |
B. The brokerage may require an independent contractor to have a cell phone
| | | | | | | | | | | |
This question is a bit dated but you may encounter something similar on the
| | | | | | | | | | | | | |
license exam. That said, one of the key differences between employees and
| | | | | | | | | | | |
independent contractors is the level of supervision; an independent contractor | | | | | | | | | |
uses his judgment how to perform a task, while an employee receives specific
| | | | | | | | | | | | |
instructions on how to accomplish each task. | | | | | | |
An instruction to carry a particular equipment doesn't particularly suggest an
| | | | | | | | | | |
independent contractor |
relationship, making B the only possible answer. But certainly all agents carry | | | | | | | | | | | |
cell phones now whether instructed to do so or not.
| | | | | | | | |
A tenant has already paid his $1,200 rent for the month for a single-family
| | | | | | | | | | | | | |
property. The property's owner sells it to a new buyer, with closing occurring on
| | | | | | | | | | | | | |
the 15th of June. The parties decide the seller is entitled to rent for the closing
| | | | | | | | | | | | | | | |
date. On the settlement statement, the prorated rent will appear as a:
| | | | | | | | | | |
| | | | | | |
Institute Exam multiple choice questions | | | | |
with verified solutions & Rationales | | | |
A home inspection revealed that black mold is present in a home. What should
| | | | | | | | | | | | | |
the buyer's agent tell the buyer?
| | | | | |
A. That black mold is toxic, and that the buyer should not buy the house
| | | | | | | | | | | | | |
B. That mold is commonplace, and can be cleaned up with bleach
| | | | | | | | | | |
C. To require the seller to remedy the problem
| | | | | | | |
D. To seek expert advice - Correct answer ✔answer:
| | | | | | | | |
D: seek expert advise
| | |
A buyer's agent typically does not have expertise in environmental hazards. The
| | | | | | | | | | | |
proper step, for the matters in a transaction outside the agent's expertise, is to
| | | | | | | | | | | | | |
advise the principal to seek expert advice. In this case, that would be a mold
| | | | | | | | | | | | | | |
remediation specialist. |
A seller wants to net $60,000 from a transaction, but will have to pay off a
| | | | | | | | | | | | | | | |
mortgage and other fees, at a total cost of $181,800. The seller will also need to
| | | | | | | | | | | | | | | |
pay a 7% commission. What will the property need to sell for?
| | | | | | | | | | | |
A. $241,800
|
B. $258,726
|
,C. $260,000
|
D. $276,060 - Correct answer ✔Answer:
| | | | | |
C: $260,000
|
Start by adding the desired net and the other cost, including the mortgage
| | | | | | | | | | | | |
($60,000 + $181,800 + $241,800). | | | | |
Subtract the commission percentage from 100% (100% -7%=93%)
| | | | | | |
Then divide the total by that percentage ($241,800 / .93 = $260,000)
| | | | | | | | | | |
Since the agent bases her commission on the total selling price, you can't simply
| | | | | | | | | | | | |
add 7% of the costs and profit to the selling price or you wont quite have her full
| | | | | | | | | | | | | | | | | |
commission. You need a price that the agent can take 7% from and still satisfy
| | | | | | | | | | | | | | | |
the seller's goals. A fuller explanation is found in the section on seller's net
| | | | | | | | | | | | | |
problems in ch. 18 of Fundamentals. | | | | |
A buyer asks the buyer's agent to write an offer on terms that don't match the
| | | | | | | | | | | | | | | |
listing agreement. The buyer's agent refuses to write the offer and then, in
| | | | | | | | | | | | |
writing, unilaterally terminates the agency relationship with the buyer. Which
| | | | | | | | | |
is true?
|
A. Buyer's agent will be subject to disciplinary action
| | | | | | | |
B. Buyer's agent is permitted to unilaterally terminate the agency relationship
| | | | | | | | | |
C. Buyer's agent is allowed to terminate the agency, but must write the offer
| | | | | | | | | | | | | |
before terminating |
D. Buyer's agent is not permitted to write such an offer - Correct answer
| | | | | | | | | | | | | |
✔answer:
,B. Buyer's agent is permitted to unilaterally terminate the agency relationship
| | | | | | | | | |
An agent may unilaterally renounce an agency relationship. Termination of the
| | | | | | | | | | |
agency may involve a breach of contract; if so, the agent could be liable to the
| | | | | | | | | | | | | | | |
principal for damages resulting from the breach. However, breach of contract
| | | | | | | | | | |
isn't in itself grounds for disciplinary action. Failure to present an offer is
| | | | | | | | | | | | |
grounds for disciplinary action; but here, since the agent didn't write the offer,
| | | | | | | | | | | | |
no offer exists yet. (An agent is free to renounce rather than help the principal
| | | | | | | | | | | | | | |
do something pointless or unwise.)
| | | |
Closing is set for August 1. The seller has already paid the property taxes for the
| | | | | | | | | | | | | | | |
year, totaling $6,000. How much of that amount is the buyer's responsibility?
| | | | | | | | | | |
A. $2,000
|
B. $2,500
|
C. $3,000
|
D. $3,500 - Correct answer ✔answer
| | | | |
B: $2,500
|
Since the buyer is taking title on August 1, she's responsible for the property
| | | | | | | | | | | | | |
taxes for the remaining five months of the year (August, September, October,
| | | | | | | | | | | |
November, and December). Divide the annual taxes by 12 to find the monthly | | | | | | | | | | | | |
amount: $6, - $500. Multiply that figure by 5 to determine the buyer's
| | | | | | | | | | | | | | |
share of taxes: 5 x $500 = $2500 (Generally the state will tell you when to treat
| | | | | | | | | | | | | | | | |
all months as equal, but here even set of dollar amounts in the answers lets you
| | | | | | | | | | | | | | | |
know that) |
, The IRS issues rules that determine when a real estate agent is an employee and
| | | | | | | | | | | | | |
when he is an independent contractor. Which of the following statements on
| | | | | | | | | | | | |
that topic is FALSE? | | |
A: The brokerage may allow an independent contractor to place her own ads
| | | | | | | | | | | | |
but the ads must conform with the firm's advertising rules
| | | | | | | | | |
B. The brokerage may require an independent contractor to have a cell phone
| | | | | | | | | | | |
C. The brokerage will take taxes from an employee's paycheck
| | | | | | | | |
D. The brokerage will tell an employee when to work certain hours - Correct
| | | | | | | | | | | | | |
answer ✔answer |
B. The brokerage may require an independent contractor to have a cell phone
| | | | | | | | | | | |
This question is a bit dated but you may encounter something similar on the
| | | | | | | | | | | | | |
license exam. That said, one of the key differences between employees and
| | | | | | | | | | | |
independent contractors is the level of supervision; an independent contractor | | | | | | | | | |
uses his judgment how to perform a task, while an employee receives specific
| | | | | | | | | | | | |
instructions on how to accomplish each task. | | | | | | |
An instruction to carry a particular equipment doesn't particularly suggest an
| | | | | | | | | | |
independent contractor |
relationship, making B the only possible answer. But certainly all agents carry | | | | | | | | | | | |
cell phones now whether instructed to do so or not.
| | | | | | | | |
A tenant has already paid his $1,200 rent for the month for a single-family
| | | | | | | | | | | | | |
property. The property's owner sells it to a new buyer, with closing occurring on
| | | | | | | | | | | | | |
the 15th of June. The parties decide the seller is entitled to rent for the closing
| | | | | | | | | | | | | | | |
date. On the settlement statement, the prorated rent will appear as a:
| | | | | | | | | | |
