Illinois Real Estate Broker PSI Practice Exam-with 100% verified solutions 2024-2025-tutor, Exams of Business Fundamentals

Download Illinois Real Estate Broker PSI Practice Exam-with 100% verified solutions 2024-2025-tutor and more Exams Business Fundamentals in PDF only on Docsity! Illinois Real Estate Broker PSI Practice Exam-with 100% verified solutions 2024-2025-tutor verified A licensee was showing property in an eight-unit complex to a prospective tenant using a motorized wheelchair. The tenant wanted to rent a unit, install grab bars in the bathroom, and lower all the door handles. The landlord... Must allow the tenant to make the modifications at the tenants expense, but can require, by the terms of the lease, restoration of the property Which of the following is the best description of a fee simple estate? The most complete ownership in property that one can obtain A licensee plans to send out an email offering his services. According to the CAN-SPAM Act, the licensee must Tell recipients how to opt out of receiving future emails The owner of an apartment building has just signed an agreement with a real estate firm. Has an agency been formed? Yes, because an agency is formed whenever one party delegates to another the right to act on his behalf in certain business transactions The most typical purpose of a deed restriction is to control future uses of the property A managing broker requires his licensees to mention a particular lender to buyers. The broker has a financial interest in this particular mortgage lender. Which of the following should the licensee recommend to buyers? Consider this lender, disclosing the broker's interest, and other lenders. A couple leased a waterfront bungalow. The Lease began on June 15, 2012, and continued through July 31, 2010. The couple had An estate for years A licensee anxious to make a sale violates his duties toward his principal if he volunteers which of the following pieces of information to a prospective buyer? You should make an offer for less than the listing price because the owner is anxious to sell An owner obtains a new mortgage on her house because the house has appreciated in value and she wants money for an investment. The new mortgage rate is 1% lower than the old rate. What is this process called? refinancing An enforceable purchase agreement is formed when the buyer knows of the seller's written acceptance of the offer Which of the following is generally income tax deductible in home ownership? points paid to obtain the loan Which of the following is true concerning eminent domain? The property is taken through the process of condemnation When a borrower defaults on a mortgage, an acceleration clause allows the lender the option of demanding immediate payment of the entire loan balance. An owner has been asked to grand a 60-day option to purchase a property. When should the purchase price be decided? Upon creation and signing of the option to purchase. Under which of the following circumstances may a seller keep the earnest money deposit of a defaulting buyer? if the seller wants to declare the sales contract forfeited, and there is a forfeiture clause in the contract A deed restriction in a subdivision created a community playground that used a few square feet from the rear of every owner's lot. An owner has begun making plans to convert the rear half of his lot to a garden. The plans would require the removal of park equipment. A neighbor objects to these plans. The neighbor should apply for a court injunction against the owner's plans. An appraisal prepared using the amount of rent generated by the property is an example of which of the following approaches to value? Income. The income approach to value is determined by the amount of net income the property will produce over its remaining economic life. Which of the following best describes steering? A licensee shows prospects of a particular race properties only in areas populated by families of the same race When using the sales comparison approach, a licensee determines that a comparable property's tile floor in the entry hall is worth $2,000. The subject property does not have tile floors at all. Which of the following adjustments should be made? the comparable should be adjusted downward. It is always the comparable that is adjusted, never the subject property. If the comparable is better than the subject property, the adjustment to it is downward. If the comparable is not as good as the subject property, the adjustment to it would be upward. An owner has accepted an offer. Another buyer approaches the licensee with an offer on the same property. The licensee should tell this second offeror that this offer can be presented as a back-up offer only. Once an owner has accepted an offer, the owner has entered into a legal and binding contract. A real estate licensee was hired by a property management company to lease and manage commercial properties. Each commercial lease was different based on the negotiations of the parties. Which of the following should the licensee do in this circumstance? Seek legal counsel to write or review the leases. Drafting a commercial lease may constitute the practice of law, and a real estate licensee cannot practice law unless also a licensed attorney. On February 1, a licensee with ABC Realty takes a 3-month exclusive right- to-sell listing on a house. On March 1, the licensee moves out of state and inactivates his license. What happens to this listing? It remains a valid exclusive right-to-sell listing contract with ABC Realty. The listing belongs to the brokerage firm, not the individual licensee. A person bought property from a seller and received a general warranty deed. Two years later, the seller's brother came forth and claimed he had an ownership interest in the property. The brother stated he knew the court would uphold his interest. In a general warranty deed, the buyer is protected from this situation by the covenant.. of seisin. Although all covenants in a general warranty deep work together to protect the buyer, the covenant of seisin specifically guarantees that the owner owned the real estate at the time of the sale and had the right to convey it. what do special, general and universal types of agency have in common? The originate with the principal. Which of the following could be deducted as expenses from annual income taxes on an investment property? Painting a structure. Repairs and recurring expenditures such as repairing a leaking roof or painting a structure are tax deductible expenses. A builder is obtaining a construction loan $95,000 for a single-family residence. Under the Truth-in-Lending Act, disclosure of a prepayment penalty by the lender is not required for a business loan. Which of the following is a unilateral contract? an option. A unilateral contract is one in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party. An option is a unilateral contract because the seller agrees to sell for a certain period of time at set terms, provided the buyer performs by paying the specified option price. A metes and bounds description must contain which of the following? A point from which the description begins and at which it ends A prospective buyer says he only has $1,000 for earnest money, but he anticipates receiving $4,000 as a gift from his aunt. The licensee accepts He did not have the owner's permission to do this. After the statutory time period, the farmer put in a claim of ownership. He may become the owner of the land through adverse possession is acquiring title to real estate owned by someone else. The use must have been continuous for the time period set by state law, and without the owners permission A church owns a retirement home and restricts the rental of the units to church members regardless of age, sex, race, color, or national origin. Is this policy a violation of federal fair housing laws? No, because religious organizations may limit occupancy of dwelling units they own to persons of the same religion. The best way to determine whether or not there is an encroachment of a boundary line is to Have a survey done. A survey may reveal easements or encroachments that public records do not reveal. Real property taxes are taxes on A house and the land on which it sits. Which of the following is the most important element for a property manager to consider when selecting rental rates? The rental rates for similar units in the area A licensee who finds a buyer a house with his own firm and is paid a fee by the buyer for finding a suitable house has what type of agency? Dual agency A licensee has a property under contract with a financing contingency. The mortgage lender calls the licensee and asks if the contract price on a property can be decreased by $5,000. The mortgage lender explains that this will help the buyer qualify for a loan and help the seller close. Which of the following should the licensee do? Explain that she is not authorized to make this change without written consent to the parties A pest inspection is ordered and an infestation is found. Who pays to correct the problem? The party specified in the contract. A buyer bought a home from an owner. The owners green to owner- finance the property. The parties agreed to amortize the loan over 15-year period. the buyer became the owner of record of the property, and the seller had a lien against the property. What type of instrument was used to purchase the property? A purchase money mortgage. The buyer squires legal title and the seller has a lien against the property A buyer signs a contract to purchase a house, but then attempts to have the contract voided. He is able to prove that he was legally mentally ill when he signed the contract. Will the buyer likely have the contract declared void? Yes, because his mental illness renders the contract voidable The Real Estate Settlement Procedure Act (RESPA) applies to which of the following loans? A first mortgage home loan A buyer bought a house in a subdivision zoned residential. The buyer wanted to open a day care in the home. To do so legally, the buyer should obtain a conditional use permit. AKA: special use zoning An owner of an apartment building asks a licensee who is managing the property not to advertise the apartments in the local newspaper because it is published by her ex-husband. The property manager argues that many advertisements in this newspaper have produced rentals, but the owner will not change her mind. Should the property manager advertise in this newspaper? No, because the property manager is obligated to obey the lawful instructions of the owner A property is sold to satisfy a judgment lie. There are also annual real estate taxes, a first mortgage, and a second mortgage due. Which of the following must be paid first? Annual real estate taxes. A local tax lien for unpaid taxes has priority over all other liens When should a licensee provide the owners a copy of their listing agreement form? Immediately upon signature of the owners. The listing agreement is a legal contract. A copy should be given to all parties of the contract at the time of signing. Which of the following is an example of a functional obsolescence? Types of Less than Freehold Estates 1. Estate for years - limited period of time - two dates - Ex. Summer rental 2. Periodic Tenancy - Recurring timeframe (month to month) 3. Estate at Will - Can end at any time 4. Estate at Sufferance - also known as holdover lease - tenant stays beyond end of lease without approval of landlord Types of Freehold Estates 1. Fee Simple Absolute - Highest degree of ownership - Has encumbrances like taxes 2. Fee Simple Defeasible - Has conditions and can lose ownership 3. Life Estate - Own property based on someone else's life Government Powers P.E.T.E - Police power: tell you how to use property (ex: building codes, rent control, zoning) - Eminent domain: gov condemns property + pays you - Taxation - Escheat: no heirs so property goes to state Types of Ownership 1. Severalty: sole ownership 2. Concurrent: own with others - Joint Tenancy: time, title, interest, possession; right of survivorship (doesn't go to heirs) - Tenancy in common: possession, no right of survivorship, can go to heirs Essential Elements of Value 1. Scarcity: how much of it is there? 2. Transferability: Can you sell it? 3. Utility: Can you use it? 4. Demand: Do people even want it? Types of depreciation 1. Economic Obsolescence - Outside of property (ex. crime, train tracks, airport) 2. Functional Obsolescence - Poor design (5 bed, 1 bath) 3. Physical Deterioration - Falling apart Appraisal Methods 1. Market Data: uses comps in area 2. Cost Replacement: uses how much it would cost to replace brand new (ex: libraries, schools, police stations) 3. Capitalization Income: More income = more value Deed VS Title Deed = evidence of transfer (receipt) Title = proof of ownership Types of Liens 1. Specific Lien - mortgage, property tax, mechanics lien - If you don't pay, they take something specific 2. General Lien - Income tax, lost judgement lien - If you don't pay, they can take everything Fair Housing Laws prohibit housing discrimination based on sex, race, color, religion, national origin, disabilities, or familial status 1968 1. Steering: Telling people what neighborhood they should be in 2. Blockbusting/panic peddling/panic selling: Convincing people to sell their house because of the type of people moving to the neighborhood 3. Redlining: Refusing to lend to people from certain areas