Texas Principles of Real Estate II Final Exam Actual Exam Questions and Answers, Exams of Real Estate Management

Download Texas Principles of Real Estate II Final Exam Actual Exam Questions and Answers and more Exams Real Estate Management in PDF only on Docsity! Texas Principles of Real Estate II Final Exam Actual Exam Questions and Answers | Verified Answers | Graded A+ Latest Version (Just Released) What type of professional must an investor use to conduct a tax-deferred exchange? ---- CORRECT ANSWER------------A qualified intermediary Which form is used by the borrower when shopping for a loan? ----CORRECT ANSWER------------Loan Estimate If you suspect there might be an environmental issue with a property you're selling, but you're not sure, what should you do? ----CORRECT ANSWER------------Ask a lot of questions, ask for help, and disclose everything if issues do exist. What will be of the highest concern to a fix-and-flip investor once the property is rehabbed? ----CORRECT ANSWER------------Making a profit quickly to start a new project Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted? ----CORRECT ANSWER------------Price Augustine wants to move to a different area of town. He doesn't have a car; he prefers to walk or take public transportation everywhere. He's looking for housing near the subway. Communities designed and developed around access to public transportation are known as what? ----CORRECT ANSWER------------TOD A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)? ----CORRECT ANSWER------------12.5 FACTA requires anyone with access to consumers' credit reports to ______. ---- CORRECT ANSWER------------Comply with the records disposal rule Which of the following is an example of a prime lender, as compared to a subprime lender? ----CORRECT ANSWER------------Offers lower fees A licensee must understand risks and provide disclosure of known environmental issues. A licensee must also do which of the following? ----CORRECT ANSWER---------- --Know when to ask questions. Lenders require a borrower to establish and maintain a reserve fund to ______. ---- CORRECT ANSWER------------Pay any property taxes in case the borrower misses a payment Brandon recently purchased an old warehouse building. This building will serve as a hub for local deliveries of fruits and vegetables within the state. During its first week in operation, one of the delivery drivers was involved in an accident that spilled coconuts all over the road and shut down the interstate for hours. What type of risk is this? ---- CORRECT ANSWER------------Static Which entity enforces subdivision covenants? ----CORRECT ANSWER------------The civil court system What does the right of first refusal clause do when included in a lease agreement in Texas? ----CORRECT ANSWER------------Gives a tenant the option to buy the property they are leasing before the property is sold to someone else With the cost approach to value, what is the reproduction cost? ----CORRECT ANSWER------------Cost to build an exact replica of the subject, with the same materials and deficiencies A steel plant is an example of which commercial property category? ----CORRECT ANSWER------------Manufacturing What does a balloon payment represent at the end of a loan term? ----CORRECT ANSWER------------It means that some principal remains at the end of the loan term. When a real estate professional goes beyond a broad brushstroke approach to a CMA and takes the time to research not only recent sales, but competition and expired listings, what trait are they exhibiting? ----CORRECT ANSWER------------Diligence Voluntary alienation includes which of the following? ----CORRECT ANSWER------------ Kali intentionally transfers her property to Sandy. What section of the property management agreement states that the owner actually owns the property, and it's not facing foreclosure? ----CORRECT ANSWER------------ Owner's covenants Why are residential properties popular with investors? ----CORRECT ANSWER----------- -They're always in demand. Appraiser Jerry is looking past how a property is being used to determine a more optimal function. What is he determining? ----CORRECT ANSWER------------Highest and best use When a mortgage is used as a security instrument, who holds the mortgage and the promissory note? ----CORRECT ANSWER------------The lender holds the mortgage and the note. To whom would a 1031 tax exchange usually appeal? ----CORRECT ANSWER----------- -Investors Which of the following statements about zoning ordinances is true? ----CORRECT ANSWER------------Before zoning ordinances are changed, they must be examined for fairness and reasonableness. When a buyer assumes the seller's current loan, what is the purpose of an estoppel certificate? ----CORRECT ANSWER------------To show the balance due on the loan Identify the seller's responsibilities at and before closing. ----CORRECT ANSWER-------- ----Supply the deed conveying the property, title abstract, and the payoff statement. Who is responsible for reviewing the Closing Disclosure before closing? ----CORRECT ANSWER------------The buyer and the seller In Texas, leases have the implied covenant of quiet possession. What does this mean? ----CORRECT ANSWER------------Landlords must give the tenant actual possession of the leased premises. Which of the following requires property managers and landlords to protect any sensitive personal information that they collect or maintain about their tenants from unlawful use or disclosure? ----CORRECT ANSWER------------Texas's Identity Theft Enforcement and Protection Act Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end? ----CORRECT ANSWER--- ---------The lease continues on a month-to-month basis. In a lease agreement, what consideration does the landlord give to the tenant? ---- CORRECT ANSWER------------Right to occupy the property How many parties does a deed of trust involve? ----CORRECT ANSWER------------ Three: borrower, lender, and trustee Xavier and Juanita Jenkins want to make a few improvements to their leased apartment. The couple would like to rip up the carpet in the living room and have the hardwood floors underneath restored. Which of the following statements about the improvements is true? ----CORRECT ANSWER------------Xavier and Juanita need to get the landlord's permission before they make any improvements to the property. How many members belong to the Texas Apartment Association? ----CORRECT ANSWER------------Over 11,000 Your client hates the fact that out of her $1,027 monthly payment, more than $900 is going toward interest. What do you tell her? ----CORRECT ANSWER------------"That's amortization for you." Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution? ----CORRECT ANSWER------------Freddie Mac (FHLMC) Ensuring you've answered the word problem correctly is which of the following steps? -- --CORRECT ANSWER------------Checking Which of the following is true about ownership or title to a property? ----CORRECT ANSWER------------Constructive notice to the public of real property ownership occurs when the deed is recorded. A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value? ----CORRECT ANSWER------------$200,000 What is 1/4 x 2/3? ----CORRECT ANSWER------------1/6 What type of capital gains may property owners encounter? ----CORRECT ANSWER---- --------Short- and long-term Before moving out, Texas tenant Adam failed to give sufficient notice to his landlady, Yolanda. Yolanda is so happy the lease agreement included that provision in bold type about tenants who fail to give sufficient notice and what that means with regard to the security deposit. Given the situation, which of the following statements is true? ---- CORRECT ANSWER------------Yolanda does not have to refund any of Adam's security deposit. What is the best description of a deed? ----CORRECT ANSWER------------A document to transfer ownership/interest in real estate Kayla purchased a home in January, fixed it up, and then sold the property in May of the same year for a gain of $45,000. What type of capital gain is this? ----CORRECT ANSWER------------Short-term Jeff has filed a quiet title suit against Roger. What's the purpose of this suit? ---- CORRECT ANSWER------------To clear up a cloud on title If the buyer owed taxes for 95 days, the seller owed for 270 days, and annual taxes were $4,000, what would the buyer's prorated tax expense be? ----CORRECT ANSWER------------$1,041.20 You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home? ----CORRECT ANSWER------------Give more weight to the list price on the comparable that's most similar to the property. Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What's the maximum number of adjustments Steve should make to the Joneses' property? ----CORRECT ANSWER------------Zero. Steve won't adjust the subject property. Only the comparable sales price is adjusted. If it is inferior, adjust upward. If it's superior, adjust downward. How are closings typically conducted? ----CORRECT ANSWER------------In person or through escrow Grady Gumble had a durable power of attorney in place when he died while rock climbing. His attorney-in-fact is Gail Fife. Given the situation, which of the following statements is true? ----CORRECT ANSWER------------The POA terminated upon Grady's death. Which of the following organizations is one of the most influential in Texas when it comes to advocating for the rental housing industry? ----CORRECT ANSWER------------ Texas Apartment Association Information about which of the following is included in the Uniform Residential Loan Application? ----CORRECT ANSWER------------Mortgage type Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice's mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar? ----CORRECT ANSWER------------$370,500 The property management agreement between owner Susan and property manager Phil creates a relationship where Phil is the general agent for Susan. This means that Phil has the legal ability to independently _______. ----CORRECT ANSWER------------ Handle all of the daily operations required to manage the property Who is responsible making all home repairs and meeting other terms of the sales agreement regarding the home? ----CORRECT ANSWER------------The seller Assuming that the seller pays for the date of closing, if closing is July 7, how many days will the seller be responsible for paying using a statutory year? ----CORRECT ANSWER------------187 days A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation? ----CORRECT ANSWER------------External depreciation A _____ is the bottom number of a fraction. ----CORRECT ANSWER------------ Denominator Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer? ----CORRECT ANSWER------------ Pending Which of the following properties is exempt from the FIRREA federal appraisal guidelines? ----CORRECT ANSWER------------A refinance of a property valued at $375,000 Bridget has an investment portfolio that includes an equity REIT. Which of these is most likely to be part of the REIT's investment? ----CORRECT ANSWER------------Retail shopping centers How long must a taxpayer have lived in a home in order to claim a capital gain exclusion? ----CORRECT ANSWER------------Two of the preceding five years Before development of its new zipper factory begins, XYZ Corp. finds out that a section of the property it wants to build on is prone to flooding. It decides to dedicate this portion of the property to the government for public use to get out of handling the maintenance and drainage issues. The local government refuses. Why? ----CORRECT ANSWER----- -------The maintenance or cost to fix the problem might outweigh the benefits of its use. Maya owns a small graphics shop and is meeting with her tax professional to review the year's receipts and other tax documentation. Her tax advisor lets her know that she has an appreciating asset, which makes Maya very happy! Which of the following is Maya's appreciating asset? ----CORRECT ANSWER------------The retail addition she put onto the building she already owned Soren is an appraiser. As such, what guidelines must he follow? ----CORRECT ANSWER------------Uniform Standards of Professional Appraisal Practice (USPAP) Fiona signed a lease with her landlord for a commercial building. A percentage of Fiona's sales will be paid to the landlord, in addition to her lease payment. Why would Fiona agree to this arrangement? ----CORRECT ANSWER------------Fiona wants to reduce her base rent. What type of value may consumers be interested in if they are looking for the potential rate of return? ----CORRECT ANSWER------------Investment value Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole? ----CORRECT ANSWER------------Contribution Compared to homes built before 2004, ENERGY STAR®-qualified homes are rated how much more energy efficient?. ----CORRECT ANSWER------------15% Which factor that influences value considers the property's function? ----CORRECT ANSWER------------Utility Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market? ----CORRECT ANSWER------------ Broker's price opinion Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step? ----CORRECT ANSWER------------Obtain a pre-qualification letter. In Texas, approximately _______ of land is publicly owned. ----CORRECT ANSWER---- --------5% A real estate transaction has a closing date of August 5. The seller, who's responsible for closing costs up to and including the day of settlement, has not yet paid annual property taxes of $1,290. If proration is based on a statutory calendar, the buyer will be_______ on the closing statement. ----CORRECT ANSWER------------Credited $771 The ______ is responsible for paying any tax reserves required to pay property taxes. -- --CORRECT ANSWER------------Buyer What type of gain is considered long term? ----CORRECT ANSWER------------A gain on a property owned more than one year In which market do lenders that originate real estate loans operate? ----CORRECT ANSWER------------Primary mortgage market Which type of RD loan program provides eligible applicants with the option to build, rehab, improve, or even relocate a dwelling in an eligible rural area? ----CORRECT ANSWER------------Single Family Housing Guaranteed Loan Program Just before closing, your buyer applies for a credit card. What could be the advantage or disadvantage at closing? ----CORRECT ANSWER------------The buyer's loan could be denied. Calculate eight months' interest on a $7,500 loan at 7.5%. Round to the nearest dollar. - ---CORRECT ANSWER------------$375 - Figure out the annual interest by multiplying the loan amount by the rate. Once you have the annual interest, divide by 12 months to determine the monthly interest. From there, multiply the monthly interest by the number of months. Which environmental issue facing property owners and managers is most commonly found in structures built before 1981? ----CORRECT ANSWER------------Asbestos Which of the following calculators would best be used for performing computations of monthly payments, maximum loan amount, and remaining balance on a loan? ---- CORRECT ANSWER------------Real estate What's it called when a number of percentage points is added to the index to determine the rate for an adjustable rate mortgage? ----CORRECT ANSWER------------Margin Which of the following units of measurement is used when determining the length of a wall? ----CORRECT ANSWER------------Feet neighborhood sold recently. The buyer wants to build condominium flats since multi- family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this? ----CORRECT ANSWER------------ Incentive zoning Which of the following statements about improvements and lease agreements in Texas is true? ----CORRECT ANSWER------------Neither the landlord nor the tenant is required to make improvements to a leased property. Many property managers use private adjusters to file and negotiate insurance claims on behalf of the owner because _________. ----CORRECT ANSWER------------Insurance claims are complex and require special skills What's the interest rate on a $14,000 loan that requires a semi-annual interest payment of $550? Round to the nearest percent. ----CORRECT ANSWER------------8% A real estate transaction has a closing date of April 20. The seller, who's responsible for closing costs up to and including the day of settlement, has already paid property taxes of $1,447 for the calendar year. If proration is based on a statutory calendar, the buyer will be_______ on the closing statement. ----CORRECT ANSWER------------Debited $1,005 - The buyer will be debited $1005 because the buyer owes the seller this amount for taxes the seller already paid. $1,447 ÷ 360 = $4.02, and $4.02 × 250 days = $1005. What title guarantees will Jody have if her property is deeded to her after a foreclosure? ----CORRECT ANSWER------------The covenant of seisin Luciana is very successful in her profession, partially because she was fortunate enough to connect with several developers in the early days of her career. Since then, she's built a solid reputation as the "go to" person in the state to list properties on the MLS and show model homes in newly developed communities. What's Luciana's profession? ----CORRECT ANSWER------------She's a real estate licensee. April was able to establish a day care in a residential neighborhood, where businesses would not normally be permitted. This required approval of the planning and zoning commission and _____________. ----CORRECT ANSWER------------A special use or conditional use permit Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their six-bedroom house. What two types of data will Boris gather? ---- CORRECT ANSWER------------General and specific Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal leads, what does he need to do next? ----CORRECT ANSWER------------ Identify what data is needed In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what? ----CORRECT ANSWER------------Bracketing What is the term used to define someone who is granted power of attorney for another person? ----CORRECT ANSWER------------Attorney-in-fact Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property? ----CORRECT ANSWER------------Zero years (personal residences cannot be depreciated) Which of the following key players attends closing to pay for and receive clear title to the property? ----CORRECT ANSWER------------Buyer Tax Increment Reinvestment Zones (TIRZs) were implemented for what purpose? ---- CORRECT ANSWER------------To attract new investors to certain areas During the analyzing step of solving a word problem, what should you be doing? ---- CORRECT ANSWER------------Determining what is being asked In Texas, leases may be terminated by expiration, ______, or abandonment. ---- CORRECT ANSWER------------Mutual agreement With this type of loan, personal property is included with the real property in the sale. It's commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums. ----CORRECT ANSWER------------Package mortgage To determine if a rental property has a(n) ______ issue, property owners and managers should first have the property tested, and then, if the levels are high, take steps to mitigate the problem. ----CORRECT ANSWER------------Radon What's the term for a notice given directly to and received by a person? ----CORRECT ANSWER------------Actual notice Which type of investor would be interested in a "fixer" property? ----CORRECT ANSWER------------Flipper What information does the Loan Estimate NOT provide to buyers under required disclosures law? ----CORRECT ANSWER------------Final closing costs Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______. ----CORRECT ANSWER------------Subprime loans Carla Ricardo has been offered her dream job in another state. She asks her current landlord to let her out of her lease early. The landlord agrees to do so, with no strings How does the "break-even point" relate to percentage leases? ----CORRECT ANSWER------------The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point. Who is responsible for collecting the commission at closing? ----CORRECT ANSWER--- ---------Broker Who at the closing table examines all documents for buyers or sellers and represents their best interests? ----CORRECT ANSWER------------Buyer's or seller's attorney Shelly's listing sold for $650,000. The total commission generated from the sale is 5%, of which Shelly's brokerage keeps half. Shelly has an agreement with her broker that she earns 90% of commission generated. How much will she be paid for this sale? ---- CORRECT ANSWER------------$14,625 If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%? ----CORRECT ANSWER------------$11,500 What is an appraisal? ----CORRECT ANSWER------------An opinion or estimate of a property's value as of a specific date The market value of your client's property is $280,000. Taxes in the area are assessed at 60% of market value. Your client's semi-annual tax bill was $1,461. What's the tax rate per 100? ----CORRECT ANSWER------------Multiply market value ($280,000) by assessed percentage (60% or .6) to get an assessed value of $168,000. The semi- annual bill was $1,461, so annual taxes are $2,922. Divide annual taxes by assessed value: $2,922 ÷ $168,000 = .0174. Multiply this by 100 to get $1.74. Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here? ---- CORRECT ANSWER------------Plottage What does RESPA stand for? ----CORRECT ANSWER------------Real Estate Settlement Procedures Act Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend's neighborhood. It's listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here? ----CORRECT ANSWER------------ Substitution In Texas, a testator must be of legal capacity. What does that mean? ----CORRECT ANSWER------------The testator must be of sound mind and at least 18 years of age. What takes precedence over a deceased person's wishes to grant his property at death, even if those wishes are specified in the decedent's will? ----CORRECT ANSWER-------- ----Operation of law What's one way property managers can assist property owners in maintaining their investments? ----CORRECT ANSWER------------Spend enough to maintain and upgrade the property so tenants will want to live there. Which one of the following pieces of information should all commercial leases contain? - ---CORRECT ANSWER------------The lease agreement start and end dates Using a calendar year, what would the daily rate be if annual taxes are $4,662? Round to the nearest cent. ----CORRECT ANSWER------------12.77 When you're using the sales comparison approach to value a property, which of the following is considered a category of adjustment? ----CORRECT ANSWER------------ Financing terms and cash equivalency Mary Ann is looking for the potential rate of return. What sort of value is she interested in? ----CORRECT ANSWER------------Investment value Property managers spend a good deal of their time overseeing and managing others: maintenance people, staff, contractors, and sometimes even tenants. To be effective in this area, a property manager needs to have what type of skills? ----CORRECT ANSWER------------Supervisory What is a reverse exchange? ----CORRECT ANSWER------------An investor finds and closes on an investment property and then decides to immediately sell another investment property. With a triple net lease, the tenant pays _______ separately from the base rent. ---- CORRECT ANSWER------------Taxes, insurance, and maintenance Jennings has received a Closing Disclosure from his lender. What's the purpose of this form? ----CORRECT ANSWER------------To detail all costs Jennings will owe at closing If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? ----CORRECT ANSWER------------20% Who is the lessee in a lease agreement? ----CORRECT ANSWER------------Tenant According to Texas's Privacy Policy law, property managers who require tenants to provide their Social Security numbers on the lease agreement must have a privacy Which of the following requires a landlord or property manager to obtain a tenant's written consent before sharing any information about the tenant with an unaffiliated third party? ----CORRECT ANSWER------------Federal Trade Commission (FTC) privacy rule Who is responsible for obtaining evidence of title and title insurance? ----CORRECT ANSWER------------The buyer What is the calculation used to determine the estimated monthly interest amount a borrower will pay on a loan? ----CORRECT ANSWER------------(Loan balance x interest rate) ÷ 12 In completing a CMA, finding a comparable property that had a quick sale may indicate which of the following? ----CORRECT ANSWER------------The market for similar homes is good. Jason, your client, is developing a subdivision of 140 houses. He may place deed restrictions on as many as ______ properties. ----CORRECT ANSWER------------140 (100%) When pricing a property, which of the following is a reason a licensee would consider expired listings? ----CORRECT ANSWER------------To determine the price at which a property won't sell At the closing table, who examines all documents for buyers and represents their best interests? ----CORRECT ANSWER------------Buyer's attorney Donald purchased a property five years ago. He lived in the property for a year, then rented it out to a family friend. Now he is selling the property for a capital gain of $10,000. Can he exclude the gain from his taxes? ----CORRECT ANSWER------------No, he did not live in the home for two of the preceding five years. Gloria has left a gift of real property in her will to her great-grandson, Tony. This gift is known as a ______________. ----CORRECT ANSWER------------Devise In the real estate business, which professional's primary role is to fund high risk land development/construction projects? ----CORRECT ANSWER------------Investor Brendan's lender set him up with a loan in which the majority of Brendan's early payments go toward interest, his monthly payments remain the same, and he doesn't start paying much toward his principal until closer to the end of the loan. This is ______. ----CORRECT ANSWER------------Typical amortization Which of the following is the purpose of most calculations that real estate professionals make for their clients? ----CORRECT ANSWER------------To provide information the client can use to help them make strategic decisions Who is responsible for obtaining an appraisal? ----CORRECT ANSWER------------The buyer Which veteran loan program offers qualified veterans help with the purchase of land in Texas? ----CORRECT ANSWER------------Veterans Land Program A ______ is a ratio that compares two quantities. ----CORRECT ANSWER------------Rate Which of these terms describes the actions that are required to effect a transfer of title by deed? ----CORRECT ANSWER------------Delivery and acceptance What type of value is of interest to taxing authorities? ----CORRECT ANSWER------------ Assessed value What standards do appraisers follow? ----CORRECT ANSWER------------Uniform Standards of Professional Appraisal Practice Who's responsible for any tax reserves required to pay property taxes? ----CORRECT ANSWER------------The buyer Jerome has four grown children. When he dies, he leaves his home to all four children, making them tenants in common with equal shares. One child wants to live in the house, another wants to use it as investment property, and two others want to sell it and take the cash. When they can't agree on a solution, they end up in court and the property is ______. ----CORRECT ANSWER------------Partitioned Lola recently sold her house for $767,600. The loan balance when she sold it was $179,500. What was Lola's equity? ----CORRECT ANSWER------------$588,100 Which of the following is a true statement about how adjustments are made in the sales comparison approach? ----CORRECT ANSWER------------Appraisers adjust upward when a comparable is missing a feature found in the subject property. Joe has been given the power of attorney to sign legal instruments for his son, Kent. In this situation, Joe is known as the ________. ----CORRECT ANSWER------------ Attorney-in-fact Prior to signing the closing documents, what should the parties have already done? ---- CORRECT ANSWER------------Assured themselves that the conditions and contingencies of the purchase agreement have been met What personal information about the borrower is included in the Uniform Residential Loan Application? ----CORRECT ANSWER------------Income Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has? ----CORRECT ANSWER------ ------FHA If the responsible parties refuse to clean up hazardous contamination, the EPA can hire its own contractors and seek damages in court for ______. ----CORRECT ANSWER----- -------Up to three times the actual clean-up costs Who is ultimately responsible for ensuring that any hazardous waste produced at an apartment complex is properly disposed of? ----CORRECT ANSWER------------The property owner or manager The blueprint to the transaction is another term for the _______. ----CORRECT ANSWER------------Sales contract Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate? ---- CORRECT ANSWER------------6.5% In the case of adverse possession, possession and use of a property must be well known to others. This is otherwise known as what? ----CORRECT ANSWER------------ Open and notorious Olivia purchased a property five years ago for $200,000. She put down $50,000 and financed $150,000. Today, the property is valued at $250,000. She'd like to purchase another property, so she refinanced her current property and used the equity to purchase a new property. Of what is this an example? ----CORRECT ANSWER----------- -Pyramiding If your clients want to keep their interest rates lower than the going rate and have plenty for a down payment and closing costs, they may have enough funds to _______ the interest rate. ----CORRECT ANSWER------------Buy down Because these types of properties have both specific physical and complex operational requirements, they are usually handled by more experienced real estate professionals. - ---CORRECT ANSWER------------Industrial Which of the following best describes a mixed-use property? ----CORRECT ANSWER--- ---------A building with commercial below and residential above Jim and Crystal bought their rundown little "shack" 15 years ago. Over the years, they've made structural improvements, built additions, and remodeled nearly every square inch of the property. They're ready for their next adventure and have sold their property for a capital gain of $300,000. Assuming they meet all the criteria to qualify for the capital gain exclusion (and are married filing jointly), how much of this gain can they exclude? ----CORRECT ANSWER------------$300,000 What is the purchase agreement phrase that wholesalers rely on for their investment strategy? ----CORRECT ANSWER------------"Or assigns" Which payment plan consists of the borrower making payments of interest and principal on a periodic basis, with a large amount due at the end of the loan term? ----CORRECT ANSWER------------Partially amortized payment plan Bob just closed on his investment property. He's already identified a replacement property that he'll be exchanging into by using a 1031 tax-deferred exchange. How many days does he have to close on his replacement property? ----CORRECT ANSWER------------180 Your client Joseph has a commercial income-producing property. How long does he depreciate this property? ----CORRECT ANSWER------------39 years FAR, or floor-to-area ratio, includes ______. ----CORRECT ANSWER------------All of the habitable structures on a lot When sites with hazardous substances are identified, which of the following mandates that the responsible party cleans them up? ----CORRECT ANSWER------------CERCLA The list of reports that a property manager would provide to the owner would likely include which of the following? ----CORRECT ANSWER------------Rental contracts, including expiration dates What does the Financial Institutions Reform, Recovery, and Enforcement Act require? -- --CORRECT ANSWER------------Federally related appraisals must be conducted by an appraiser who's either licensed or certified by the state. Which statement best describes an adjustable-rate mortgage? ----CORRECT ANSWER------------A loan with a rate that fluctuates based on the economic index to which it is tied. Your seller clients, the Jones family, complain that the buyer's financing fell through. "The buyer was pre-qualified! How can this happen?" they ask. You answer, "______." - ---CORRECT ANSWER------------Pre-qualification does not equal pre-approval. 8. What type of conventional life estate ends with the death of the life estate owner? ---- CORRECT ANSWER-------------b) Ordinary life estate 9. When speaking of real estate market dynamics, the amount of available properties that becomes occupied over a period of time is called ----CORRECT ANSWER------------ -b) absorption. 10. What is the primary danger of allowing an encroachment? ----CORRECT ANSWER- ------------c) Over time, the encroachment may become an easement by prescription that damages the property's market value. 11. What statement is TRUE of payment that is made from the real estate recovery fund on account of a licensee's acts? ----CORRECT ANSWER-------------d) The license is suspended immediately, but will be reissued upon reimbursement of the fund, with interest. 12. A salesperson listed a home and then transferred his license to another broker. Which of the following is true? ----CORRECT ANSWER-------------d) The listing will stay with the original broker. 13. A licensee is required to keep the Commission updated with ----CORRECT ANSWER-------------a) her current email address. 14. When an owner leases her property, she temporarily relinquishes the right to ---- CORRECT ANSWER-------------c) occupy the property. 15. Which education requirement can a person leave out when applying for a salesperson license? ----CORRECT ANSWER-------------a) Evidence of a degree in some form of postsecondary education. 16. Which of the following is an expense which would be listed on the HUD-1 Uniform Settlement Statement? ----CORRECT ANSWER-------------b) Title insurance fees 17. Listing, marketing, facilitating transactions and managing information summarizes the critical skills in which of the following? ----CORRECT ANSWER-------------d) Real estate brokerage 18. Which of the following happens when a leased property is sold? ----CORRECT ANSWER-------------a) The buyer acquires title subject to the lease. 19. Which of the following is a valid distinction between a corporation and a proprietorship? ----CORRECT ANSWER-------------a) A corporation has perpetual existence; a proprietorship terminates upon the owner's death. 20. What type of property is abstract, having no physical existence in itself, other than as evidence of one's ownership interest? ----CORRECT ANSWER-------------a) Intangible 21. In an economic system, supply is defined as ----CORRECT ANSWER-------------b) the quantity of a product or service available for sale, lease, or trade at any given time. 22. Which is NOT included in the ownership bundle of rights? ----CORRECT ANSWER-- -----------d) Taxation 23. Which of the following items are paid in arrears? ----CORRECT ANSWER------------- c) Taxes and interest 24. Which of the following laws or rulings extended discrimination to include gender, handicapped status, and family status? ----CORRECT ANSWER-------------c) The Fair Housing Amendments Act of 1988. 25. What type of seller financing allows the seller to receive a junior mortgage from the buyer to use to make the payments on the original first mortgage? ----CORRECT ANSWER-------------b) Wraparound mortgage 26. All of the following are ways of specializing in the real estate brokerage business except? ----CORRECT ANSWER-------------b) By area 27. Who are the essential parties involved in an estate in trust? ----CORRECT ANSWER-------------d) Trustor, trustee, and beneficiary. 28. The purpose of a covenant clause in a deed of conveyance is to ----CORRECT ANSWER-------------a) state the grantor's assurance or warrant to the grantee that a certain condition or fact concerning the property is true. 29. The most commonly used deed is the ----CORRECT ANSWER-------------a) general warranty deed. 30. Who owns the property in a time-share estate? ----CORRECT ANSWER-------------b) The property is owned by tenants in common or by a freehold owner who leases on a time-share basis. 31. A broker has her license suspended for violating state license law. In such a case, the licenses of her three salespeople are ----CORRECT ANSWER-------------b) inactive. 32. A property owner is precluded by deed restriction from developing a thirty foot boat dock. The limitation prompts the owner to sell to another party. The new owner ---- CORRECT ANSWER-------------b) takes title subject to the same restriction. 50. The legal description of a tract of land in a subdivision that has been recorded is usually with ----CORRECT ANSWER-------------a) the lot and block number and unit number, if any. 51. In the state of Texas, a homestead is defined as ----CORRECT ANSWER------------- b) a parcel of real property containing the owner's family home. 52. The principle which holds that there is, theoretically, a single use for a property that produces the greatest income and return is known as ----CORRECT ANSWER------------ -b) highest and best use. 53. Which of the following is true of a loan with negative amortization? ----CORRECT ANSWER-------------b) Payments are not sufficient to retire the loan. 54. A builder is required to secure a loan with mortgages on three properties. This is an example of ----CORRECT ANSWER-------------b) a blanket mortgage loan. 55. If a loan has _______________, the loan balance increases over the term of the loan. ----CORRECT ANSWER-------------a) negative amortization 56. A graduated payment loan is a mortgage loan where ----CORRECT ANSWER-------- -----c) the loan payments gradually increase. 57. License regulators, empowered by state law to oversee brokerage practices, may --- -CORRECT ANSWER-------------a) take punitive actions against fraud or misrepresentation. 58. The principal role of the Veteran's Administration in the mortgage lending market is to ----CORRECT ANSWER-------------a) guarantee loans made by approved lenders. 59. Which of the following phrases could a licensee use to advertise without violating Fair Housing laws? ----CORRECT ANSWER-------------b) "No Section 8" 60. The taxes for the year 2011 were $600.00, and were to be paid in arrears. The closing took place on June 15, 2011. Using a calendar year with the seller paying for closing day, how much was the tax proration, and how did it appear on a full settlement statement? ----CORRECT ANSWER-------------c) Debit the buyer $272.88 and credit the seller the same amount. 61. A house sold for $165,000, and the total commission received by the broker was $12,375.00. What was the rate of commission? ----CORRECT ANSWER-------------b) 7.50% 62. Under the Fair Housing Act, discrimination based on which of the following is prohibited? ----CORRECT ANSWER-------------d) None of the above. 63. Cash flow is a measure of how much pre-tax or after-tax cash an investment property generates. To derive cash flow it is therefore necessary to exclude ---- CORRECT ANSWER-------------a) cost recovery expense. 64. Capital gain tax is figured by multiplying one's tax bracket times ----CORRECT ANSWER-------------b) the difference between net sale proceeds and adjusted basis. 65. A distinguishing feature of a deed condition is that ----CORRECT ANSWER------------ -a) it gives the grantor the right to re-possess the property if the grantee violates the condition. 66. Testing for fair housing compliance ----CORRECT ANSWER-------------c) Both A and B. 67. In mortgage lending, which action is acceptable: ----CORRECT ANSWER------------- c) Refusing to make a mortgage loan because of the applicant's credit score. 68. Real estate taxes can be imposed by taxing entities at which level of government? -- --CORRECT ANSWER-------------d) All of the above. 69. What taxes are based on the assessed value of property? ----CORRECT ANSWER- ------------b) Ad valorem. 70. A buydown is a financing arrangement where ----CORRECT ANSWER-------------a) the lender lowers the interest rate on a loan in exchange for a prepayment of principal.