National Real Estate Exam v1– Latest 2026/2027 Academic Year –Complete Questions and Correct Answers | Verified Study Guide | Grade A

National Real Estate Exam v1– Latest 2026/2027 Academic Year –Complete Questions and Correct Answers | Verified Study Guide | Grade A 2026 / 2027 Academic Year Q: A buyer receives the closing disclosure and determines that the APR is 5.25% and not the 4.25% APR that was previously disclosed in the original loan estimate, this would require? Answer A 3-day extension and re-disclosure Q: A city needs to generate $720,000.640 in funds to create roads, and is considering a special bond to fund the project, a property is assessed at $220,000 with a mil rate of.004, what is the annual property tax that the owner would pay? Answer $880.00 Q: When is the owner's title policy premium paid? Answer Once, at the time of closing. Q: The secondary mortgage market buys mortgages from? Answer Banks Q: With a CMA vs that of an Appraisal, and Appraisal when MUST an appraisal be utilized? Answer When determining value for a property in an estate to be sold. Q: A seller has made a counteroffer to a buyer and has agreed to keep the offer open for a set period of time. Meanwhile, a second buyer makes the seller a higher offer that the seller would like to accept, which of the following statements is true? Answer The seller can withdraw the counteroffer before the first buyer accepts it and accept the second offer. Q: A tenant was involved in an accident that requires the modification of his apartment and the tenant does not have the money to do the necessary work, so the landlord accommodates his tenant's disabilities by making modifications for it to be handicap accessible. Once the lease is up who is responsible to restore the property from its modifications? Answer The tenant Q: An owner sold a building. The deed prohibited the sale of intoxicating beverages on the property. When the new owner opened a tavern at the location, the original owner filed a suit to reclaim the property. This suit is seeking enforcement of? Answer A deed condition Q: Advising a buyer to offer $20,000.00 less than the asking price due to extensive repairs without having a written agency disclosure would create? Answer An implied agency relationship Q: A real estate brokerage advertises specifically for buyers who wish to purchase using VA loans. Do these ads violate veterans' rights or the advertising rules of the Federal Fair Housing Laws, and if so, how? Answer No this is not discriminatory advertising because veterans from all protected classes can qualify for VA loans Q: An investor wants to generate the highest cash flow for a commercial office building, what should the agent advise would be the best solution? Answer Triple net lease Q: A four-plex purchased in 1992 would use which method depreciation? Answer Straight line method of depreciation Q: John and Betty Maple listed their home with ABC Realty. Sam Right contracted to buy it. After closing when Mr. Right moved in, he noticed the stereo speakers that were attached to the ceiling were removed and large holes were left opening into the attic. Which of the following BEST describes this situation? Answer Mr. Right may demand the return of the items claiming that they were fixtures due to their attachments to the property Q: Bill and Maggie are looking at filing a complaint after they had purchased a property using an agent that has a pool without contingencies as they wanted to move quickly, and after moving in they realize that the neighbors behind them can be seen through the fence and they don't want their children seeing "Adult" parties being thrown and now they notice staining on the surface of the plaster that they realize is actually the plaster rotting away, and that after recent rains they have pooled water underneath their home, also they find out that a home in the neighborhood is being used as short term rental which has cause parking issues. What should the broker had advised Bill and Maggie when they were first interested in the home? Answer To obtain a home inspection as well as an inspection of the pool Q: In a listing agreement or other contract for the provision of real estate services, the parties to the contract are always a? Answer Broker and the principal the broker agrees to represent Q: What promises are made on a Special Warranty Deed? Answer That the grantor has received title, and that there are no undisclosed defects since owning the property Q: A home sold with no contingencies for $800,000.00 with a LTV of 85%, the home was appraised at $700,000.00. Buyer gave $16,000 earnest money, the lender will only loan at the appraised value and the buyer cannot provide the $224,000, what options does the seller have? Answer The seller may keep the earnest money Q: Which of the following statements is TRUE concerning an unrecorded deed? Answer It does not give constructive notice of ownership Answer Commercial real estate Q: What section is directly south of section 14, of Jones township range 23 west of the 16th meridian? Answer 23 Q: Office building and retail space are examples of? Q: The owners of ABC Realty also own a controlling interest in ABC Mortgage Lending and ABC Title Insurance Services. ABC offers a package of services to provide greater efficiency and convenience to buyers and sellers using their services from listing through closing. According to the provisions of the RESPA? Answer Such an affiliated business arrangement is permitted as long as there is full disclosure of the relationships and the consumer is not required to use these services Q: A broker wants to prospect and make phone calls to previous clients, under the national do not call list, what is the time period that he may make these calls? Answer 18 months Answer Unacceptable due to its discriminatory nature Q: The broker has noticed that a great number of people who are buying in the neighborhood where his listing is located speak Russian. He also noted that an attractive feature of the neighborhood seems to be the large Russian grocery store. He decides to stop advertising the property in the city newspaper and instead advertise the property on two different Russian internet sites. This would most likely be? Q: A city has determined that net fiscal year they will need to raise $1,240,000 in real estate tax revenue. The assessed value of all real estate within the city is $310 million, so the city establishes a mill rate of $.004. A property owner's home in the city is assessed for tax purposes at $210,000. Next fiscal year, what will this property owner pay in property taxes? Answer $840 Q: When doing an appraisal for a 3 bedroom home, with 2 baths and an above ground swimming pool with a torn liner, the appraiser is not able to find any other properties in the immediate area that have a pool. What should the appraiser do to complete the appraisal report? Answer Do nothing and make no adjustments to the pool as it adds no contributory value Q: A broker is showing a house, and said that the seller had repaired a leak, even though the broker knowns that it has not been repaired, and the broker says nothing, this would be? Answer Misrepresentation by the broker Q: A planned unit development has requirement that all commercial and retail building have the same architectural design and color, this is most likely which of the following? Answer Covenant and restriction Q: A disadvantage of ownership in real estate is? Answer Liquidity Q: Susan and James are in the same brokerage. Although Susan prefers selling real estate Answer Broker should encourage the buyer to have an inspection contingency in the offer on the Westside River, she said she would let James sell on the Westside and she would see the properties on the Eastside. Would this violate any anti-trust laws? Answer No, as long as they are in the same office Q: An agent represents a buyer without signing a representation agreement and without making any brokerage relations disclosure, and agrees to show the buyer properties, many of which are his listing, as well as listings by other brokers on the MLS. The buyer wants to purchase one of the properties not listed by the agent that is available on the MLS at full price, and does not want any contingencies to weaken the deal. What should the agent do in this case? Q: An agent has a buyer with no contingencies. During a showing, the agent notices evidence of a roof leak. The seller's disclosure statement says nothing of a leak. What is the agent's duty to the buyer? Answer To inform the buyer of rook leak evidence and suggest the buyer get an inspection Q: A buyer is purchasing a home that operates on solar and does not require natural gas, there is a gas line easement that runs along the front of the property for the benefit of the neighbors. Can the buyer remove the easement? Answer NO. This is a utility easement and continues to remain with the property Q: Property sold for $150,000, the buyer gave $1000 for earnest money, with 20% down payment, and is paying 1750.00 loan cost, $560.00 title insurance, $318.00 closing fee. How much will the buyer need to bring to closing? Answer $32,313.00 Q: In order to collect a commission, which of the following is a requirement for a broker with an open listing? Answer The broker or one of his licensees must be the procuring cause for the sale Q: What kind of lease would require the lessee to pay the taxes, insurance, repairs and other operating expenses of the premises in addition to the regular rental payment? Answer Net lease Q: A seller signs a lease with a tenant for three (3) years, prior to selling the home, which of the following would be correct? Answer The buyer would have to honor the term of the lease Q: Laws that regulate how much interest may be charged are? Answer Usury laws A broker uses their state association forms when submitting an offer, the seller receives the offer and instead of singing the acceptance line of the agreement he signed the counter offer line and made a number of handwritten additions and changes on the amendment portion of the offer, it was determined that the handwritten additions and changes had no effect on the original terms of the offer, the status of this offer would most likely be which of the following? Answer No Contract has been created A house has been on the market for several months because most buyers do not want to walk through the master bedroom to reach another bedroom. This floor plan is an example of? Answer Functional obsolescence How much earnest money needs to be put down in a purchase agreement? Answer $0 as only consideration need to be performed Which of the following will not be considered relevant if HUD investigates a prospective home buyer's allegation of discriminatory treatment by a licensee in a brokerage office? Answer Whether the licenses believed she was actinging in the best interest of the prospective buyer In Tenancy in Common, if the interest is not specified in the deed how would the interest be considered? Answer The parties would have equal interest and the others would divide the remaining interest Rental rates are influenced primarily by Answer Local supply and demand Ted and Bill go out drinking and Ted tells Bill he would like to buy Bill's house for $250,000. Bill thinks about it and tells Ted he will sell him the property and they write up the terms. Ted writes Bill a check for $250,000. Later Ted takes a cab home and Bill drives himself. In the morning Bill finds Ted's check and recalls the agreement but now does not want to sell the home to Ted. This agreement would be considered? Unenforceable The broker is assisting someone who wishes to open a franchised coffee shop. He is hoping to sell lots of specialty coffee to eager consumers. Which of the following factors should the broker consider in locating the area which would be support this endeavor? Demographics should indicate a high amount of disposable income A broker wants to steamline operations and instructs her accountant to set up one bank account with multiple sub accounts and instructs that trust accounts be placed in one of the sub accounts with strict recording keeping practices. Is the broker able to set up the account this way? No, this is commingling with trust account money in same account as brokers money An Appraiser is determining value of a church, which approach to value would he most likely use Cost approach A subdivision requirement is all homes have attached two car garages. This is an example of? Covenant A seller has recently had their home fumigated, and wants the listing broker to ensure that buyers and their brokers are aware of the hazard. The listing broker puts in the showing instructions on MLS to call listing broker prior to showing. A buyers broker tries to reach the listing broker and gets no response, he uses the lock bo and shows the property to his buyers, and afterwards they come down with a respiratory problem. Who is liable and why? The listing broker is liable, he failed to take steps to notify of the hazard The buyers are purchasing a home, with the sellers giving them until April 30th to have the home inspected and make all objections delivered by that date. The home inspector's report describes a significant crack in the north wall of the basement. She suggests a professional analysis. On April 20th. the structural engineer indicates that the foundation is shifting and could fail in the future. Which of the following is the buyers' best option for responding to this information? The engineer's report is very indefinite stating that the foundation "could fail in the future". The buyers should get a second opinion before taking any other action. Title insurance covers for which of the following? Events that occur prior to the policy being issued, but show up afterwards A broker is doing a CMA on a property with a 1 bath and a fireplace. A closed comp in the area has sold for $180,000 and is a 2 bath and no fireplace. Another recently closed comparable sold for $175,000 had 1 bath and no fireplace. What would the value of the subject property be if a fireplace is worth $3,000 and a bathroom is worth 5,000? $178,000.00 A prohibition of chain link fences in a subdivision is an example of? Covenant A broker representing a Hispanic couple refuses to write an offer for a property in a predominantly white neighborhood because she feels they may not qualify for a loan would likely be guilty of? Steering The contract states that all reports, terminations, and objections need to be delivered by April 30th. A structural inspection report stating that there are issues with the basement wall was delivered on May 2nd, what is the status of the contract? Enforceable The Buyers are purchasing a property that has a shared driveway with the net door neighbor, when the property goes to settlement, the driveway easement will? Continue unless release by the neighbors Why do lenders use the standardized forms of Freddie Mac and Fannie Mae So lenders can sell to the loan on the secondary market When the ownership of a property cannot be traced from the origin to the present owner because of a break in the chin of title this establishment of current ownership usually requires? A suit to quiet title The requirement for contracts related to the sale of real estate be in writing is referred to as what? The statute of frauds Under the police powers: Building Codes are primarily designed to? Set standards for physical construction of buildings A broker has a long-term listing with his principal with a price that had been fully researched at the time of the listing a year ago. He has just been informed that property adjacent to his principal's property has been rezoned. This means that the principal's property is likely to increase significantly in value. The broker informs one of his investors, who buys the property at full price. This makes the seller happy after such a lengthy listing. Under the common law of agency which of the following best applies to the broker's action? Did not provide full disclosure to his principal as required What would be required on a Conventional loan, with the LTV greater than 80%? Private Mortgage insurance The clause allows for the lender to call the note/mortgage due in full for non payment Acceleration clause Mary inherited her grandmother's cottage. She has discovered it will be too expensive to renovate and decided to list it with ABC Realty. It was struck by lightning yesterday and burned to the ground. After learning the insurance proceeds will be sufficient to build the cottage of her dreams, she had decided not to sell. Is the listing agreement with ABC Realty enforceable? No, destruction of the property would terminate the contract between Mary and ABC Realty In which of the following cases will a formal appraisal always be required? In order to obtain an FHA insured load A husband and wife live in one unit of a duplex that they own with title held as joint tenants with right of survivorship. The husband's will leaves all his possessions to a son by a former marriage. If the husband were to die, which of the following statements would best describe the son's rights to the duplex? The son will not inherit any interest in the duplex Which condition is not required by the IRS if an associate license is to be affiliated with the broker as an independent contractor rather than as an employee? That specific, scheduled floor timed and sales meeting attendance must be mandatory A broker helped a buyer to complete an offer to purchase a "for sale by owner" home. Although he had not listed the property, the seller also requested the broker's advice about proper preparation of the property condition disclosure and other required documents, which the broker was happy to provide. The broker had no entered into a representation agreement with either part and was careful not to advise either party in a manner that would be detrimental to the other. Which of the following is a true statement? The broker is acting as a non-agent, sometimes called a transaction coordinator or broker, which some states permit A buyer asks the broker if there are any issues with the plumbing, and the broker asks the seller who provides a seller disclosure stating that there are no issues with the plumbing. After closing, the buyer has problems with the plumbing, and a plumber states that in the crawl space it was evident of substantial repairs to the plumbing system. Who is liable? The seller is liable Sam is buying a property for $200,000.00 with a %100 financing. The commission on the sale is 6% of the sales price of which his broker receives half. Assuming that Sam has no other closing costs how much money does Sam need to bring to closing? $0.00 The agent owes care, obedience, accounting, loyalty, and disclosure to? Principal The buyer is purchasing a property that the appraisal referenced extensive repairs that the buyer and seller agree that the seller will credit the buyer $12,000.00 through closing. The lender says that the amount of the credit is too high and will not approve the credit. The buyer and seller now agree that the seller will give the buyer the $12,000.00 after closing without lender approval. What is the status of this agreement? Void - as it lacks legal purpose and would create mortgage fraud A buyer is purchasing a property for $163,000.00 with 15% down and the lender is charging 1.5 points. How much does the buyer need to pay for the points? $2078.00 The Johnson's submit an offer to purchase a home with a closing date of June 15th, after having all inspections completed, their agent had a phone conversation regarding the condition of the roof of the garage asking the sellers to replace the roof before closing, with the sellers agreeing to have the repairs completed prior to closing. On June 13 is it obvious the sellers have not began, or had an roof repair work performed. What is the status of the closing and the needed repair? The seller's promise was oral in a phone call and was not made part of the written contract. The contract remains valid: the buyers have no right to change the closing and are still obligated to purchase the property. What would a broker do before commencing management duties on a new property? Sign a management agreement On an investigation for fair housing compliance, which of the following would most likely not be considered The broker felt they had the best interest of their client in mind When signing a listing agreement, the seller wants to ensure that she can keep her prize winning rose bushes in an elevated planter when she sells the home, the listing broker makes sure that the rose bushes are excluded in the listing agreement, and discloses the exclusion in the MLS. The buyer, who loves the rose bushes has her broker write up an offer for the property, and makes no reference to excluding the rose bushes from the sale with the seller accepting the offer as presented. As the closing approaches, the buyer, Anne Smith calles her agent, as she is very disturbed that when she drove by "their new home" she saw a contractor removing rose bushes from the raised bed in the back yard. The listing agent checks with the Suns and they confirm that this is what they agreed to in the listing contract. The purchase contract was silent on this issue. What is the status of the purchase contract and what is the statu The sellers approved the purchase contract as submitted and do not have the right to remove the roses. The licensee should consider negotiating a financial concession to satisfy the buyers. An investor has a tenant that is wanting to convert an office space into a donut shop, and the investor is trying to determine the best lease that they might utilize A percentage lease For properties with building permits prior to 1978, what would the broker need to provide for the seller to deliver to the buyer before a contract is created? Complete disclosure of potential lead hazard A Buyer that is retiring or living on retirement funds would most likely benefit from? Adjustable rate mortgage A buyer is purchasing a home for $195,000.00 with an %80 LTV and will pay 2 points, what is the total amount that the buyer will need to bring to closing $42,120.00 A testator may use a will to dispose of his interest in property co-owned with others after his death, but only if the property has been held in? Tenancy in common A small business rents space in a shopping center. Under the terms of the lease, the landlord pays all operating expenses. The business pays a base rent of $1,000 per month, plus %15 of monthly gross profits over $10,000. the business has a? Percentage lease A home warranty for a previously owned home would most likely cover which of the following? Plumbing, electrical, and other home systems along with major appliances Which of the following terminates an offer? Counter offer A higher loan to value ratio means? That a larger amount of the purchase price can be financed Which principle of value is being applied when a seller is wanting to do upgrades or remodeling of a property and is trying to determine the addition to the value of the property? Contribution a broker meets with his client, who owns a vacant retail store that is in demand by fast food stores. the area is growing rapidly, and occupants have a history of successfully growing their business. the owner has asked the broker to recommend the most beneficial type of lease to maximize his income. what kind of lease should the broker recommend? Percentage lease A seller is selling a property using an installment contract, what would the seller want to have in the contract to ensure that if the buyer sells the property the seller will be paid off? Alienation cause A broker was helping the buyer to close his property transaction. The buyer needed hazard insurance, so the broker, taking the most appropriate course of action what should the broker do? Give the buyer a choice of agents and allowed the buyer to choose coverage At their June 14 visit to the property, with no contingencies remaining the buyers hear from a neighbor that the historic district board is about to demand that the old garage on the property be repaired or demolished. What recourse is available to the buyers? This is not a fact, it is hearsay. The timing is also beyond the buyer's objection time limit. Since there has been no formal action by the historic district board, any demands from the board with be the responsibility of the owner at that time. They have no recourse. When an appraiser is using active, pending and sold properties to determine value the using the sales comparison approach, and comparing recent sales to the subject property, which principle of value would be applied as a direct correlation to supply and demand? Competition A salesperson is holding an open house for a listing broker, an unrepresented buyer comes in and the salesperson answers the questions that she can, and for the ones that she is unable to answer promises to get the information and get back to the buyer, what relationship is the broker in? Implied agency Buyer broker Polly is representing a retailer who is interested in purchasing, with bank financing, a vacant former gas station to redevelop into a doughnut shop. What environment reports will the lender likely require of the buyer and why? A phase two assessment which will involve sampling of the soil and water around the property to determine the presence of hazardous substances This is by far the property with the best view of the lake is? Puffing The seller excludes in the listing agreement her prize winning rose bushes from a raised planter. Upon the accepted offer, there is no reference to the rose bushes being excluded. Prior to the closing the seller takes the rose bushes which upsets the buyers, what should the broker do? Broker should work with the buyer to try to determine a value of the rose bushes How much will the seller have to credit the buyer for taxes; if the buyer is responsible for the day of closing and the taxes are $2,656 paid in arrears in Jan, with a closing date of August 18th? $1,666.37 When describing a property using the meets and bounds, which of the following would be used to complete the legal description that is starting from the point of beginning going south 150' and going west for 85' then heading North for 150' Then? East 85' to the point of beginning A property has a sales price of $160,000.00 with %15 down with 2 points, how much does the buyer need to bring to closing? $26,720.00 A buyer is told by the lender that they have no worries about their payment changing as the mortgage is fixed, upon receipt of the closing disclosure the buyers find out that loan is adjustable and they said they were not aware of this. This would require which of the following? This would require a 3 day extension The type of title insurance that reduces in coverage based on payments that are made would be? Mortgagee's policy A buyer and seller come to terms and create a contract for sale, the seller allows the buyer to have their own inspections performed, and provides a seller property condition report, and earnest money is considered liquidated damages and with buyers to object or terminate by April 25th. A closing date of May 10th is scheduled, on May 8th the buyers choose not to close for no reason. What recourse do the sellers have? Terminate the transaction and keep the earnest money For tax purposes, a four-unit apartment building purchase in 1992 must be depreciated using which of the following depreciation methods? Straight-line The type of legal description that uses townships and ranges is? The rectangular survey An appraiser needs to estimate the value of a property. The appraiser knows the constructions price per square foot and the square footage of the property. With this information, which approach to valuation can the appraiser use to estimate the value of the property? Cost A buyer puts up 5,000.00 earnest money after an offer was accepted, the lender informs him that he needs to pay off 2,000.00 in debt and he now needs to get the 2,000.00 from the earnest deposit to payoff the debt, is this allowed? Yes, but only by written agreement of both parties. A property was sold for 152,500 in an offer containing no contingencies. At the time of listing, the listing broker failed to disclose her broker duties, even though this requirement was covered in the brokerage policies and procedures manual. The property appraised for $150,000 and inspections brought up some issues. The buyer is now demanding the seller make $5,000 in repairs. You should do which of the following? Review the inspection reports and see if the buyer still wants to purchase the property. A day care wants to build on a vacant lot with industrial properties nearby, the city says that they will grant a variance, what should the broker advise the buyer with regards to writing an offer? Recommend that the offer be written subject to both an environmental study and that a variance be granted A property owner has a gas station and the zoning has been changed to that of residential, what is the owner permitted or must do with the property? The owner may only continue to operate the property with the gas station unless he would have to comply with the zoning changes. Ted and Bill go out drinking and Ted tells Bill he would like to buy Bill's house for 250,000. Bill thinks about it and tells Ted he will sell him the property. Ted writes Bill a check for 250,000. Later Ted takes a cab home and Bill drives himself. In the morning Bill finds Ted's check. This arrangement is? Invalid A subordination agreement is used to? change the priority of mortgages Upon reviewing an abstract of title an examiner notices a break in the chain of title, in order to clear up the break, what action would be necessary? A suit to quiet title A lender is looking at an appraisal that references a certificate of reasonable value, which loan type is being utilzied? a loan with a VA guarantee A borrower may take a partially amortized loan to? lower the monthly payments A newspaper has stated that an area will be rezoned for commercial use, which will increase land values. A broker lists a parcel within the area. Other lots have already increased in asking and sales prices. The listing broker presents an offer upon the current price and does not mention the price spikes of other adjoining lots to the seller. Has the broker violated his fiduciary duties? Yes, by not informing the seller of new prices, the seller did not receive the true market value A brokerage has hired a high producing salesperson who markets herself as a specialist of handicap accessible homes. A buyer complains to the broker saying the salesperson showed him a home that is not handicap accessible. Based on the facts stated, the broker should do which of the following before speaking with the salesperson? Review the salesperson's website/advertising Which of these formulas is incorrect for the income approach? value ÷ rate = income An investor wants to know what principle of value to use when determining what improvements inside the home will add more value? Contribution The owner of a property that a broker has listed a property for is very proud of the fact that he recently finished the basement to provide a very comfortable family room and a spare bedroom. How should the broker use this information? Ask the seller to confirm that the modifications were done with a building permit from the city and ask him tp provide a copy of that permit. The effect of loan discount points on the yield is to? Increase the yield to the lender If a seller asks the broker if they should disclose that someone has died in the home, the broker should tell the seller? Seek competent legal counsel A seller had a custom built freestanding ardmoire to fit the alcove in her home. This would be considered? personal property A loan estimate is required to be provided to the borrower within 3 days of the loan application being submitted A property owner knows that the well used for drinking water on the property he is selling occasionally goes dry in the summer. He also has a well report that states the water flow is adequate. What disclosure is required. The seller must disclose his direct personal knowledge of the well's performance A local market was very hot. However, it is showing signs of slowing down. Unemployment is rising, people are not moving to the area due to declining job opportunities and wages are stagnant. A home owner wanting to sell asks agent what he should do. The agent should? Advise the owner to sell now before the downturn hits. A buyer is purchasing a property for 163,000.00 with 15% down and the lender is charging 1.5 points. How much does the buyer need to pay for the points? 2,078.25 A listing agent has listed a home in which the seller owns several animals and fumigates for insects often. The owner permits a lock box, but asks the agent to disclose in the listing information that the home is often full of fumes and that appointments need to be scheduled in advance. The agent puts a lock box on the door and state in the MLS listing information "Lock box, call first" A selling agent calls for an appointment, gets no answer, and tries to show the property but finds it clouded with insecticide fog which causes the prospect to suffer severe breathing difficulties. Is the listing agent liable and why or why not? Yes, because the agent failed to take responsible steps to protect third parties from harm as instructed A developer has a 25 acre tract to be developed. Five percent of the land will be used for parks and 15% will be used for the streets. Half-acre lots are selling for 19,500. What is the potential gross income from sale of this development 780,000,000 The sellers of a 1975 home disclosed that there was a lead based paint in the property, and now the buyers are asking the sellers to remedy it sellers said no. Can the sellers refuse the buyer request? Yes, as long as they provided the required disclosures A seller has his property on the market for 350,000 and an offer comes in 10,000.00 under list price with an inspection contingency that the seller accepts, after accepting the first offer, a second offer comes in with no contingencies for 345,00.00 that the seller accepts as a second position contract (back up). After the inspections, the first buyer is demanding that the seller credit 5,000.00 in repairs and the seller will not do. With this information, what can the seller do? The seller may terminate the first offer and move the second position offer now in that of the first position. An option would require which of the following? Compensation A purchase agreement is accepted where the contract is subject to the sale of the buyers current home, this would be? an executory contract An advantage of PMI is? lower down payment A husband and former wife, have a son, the husband remarries, and owns a home as joint tenancy with the new wife. The husband passes away, who has ownership of the property? New wife owns the home in severality Townships, ranges and sections are used in which type of legal desciption? Government survey A buyer has a broker who helps him purchase also provide advice on Taxes and Title, and the broker submits a separate invoice for the services for Tax and Title advice? This would not be permitted as it is unlawful practice of law Bill and Betty are purchasing a home, during the walk through prior to closing Bill sees that the surround speakers that had been mounted to the ceiling have been removed leaving many large holes. What is bill able to do in this situation? Bill may demand that the speakers be returned as they were fixtures and should not have been removed A buyer is taking out a loan to purchase a property with a sales price of 192,000.00 with a down payment of 15% and 2.25 in points, how much will the buyer pay for the points? 3,672.00 A listing broker presents an offer from a customer that meets every term asked for in the listing agreement. The seller decides not to sell. Which of the following statements is most likely correct? The broker could collect a commission A condominium association with a requirement that at least 1 person in each unit be age 55 of older would be exempt from fair housing laws due to? familial status An agent is listing a property in an upscale neighborhood which has been owned by his family for years, can he list the property? Yes, so long as he discloses his agency coupled with an interest The statement or clause in a contract that requires the parties to perform within the agreed upon timeframes without causing undo delay, and if a party fails to perform that the contract would be in breach would be referred to as? time is of the essence A sub-divider has met the mapping requirements of the local government and applied to have the subdivision plat approved. Once approval is granted, what additional step must be taken before lots may be sold? The plat must be recorded A buyer has specified in writing an interest in purchasing a property without any legal obligation and without defining a specific project. This is referred to as? A letter of intent To be considered an independent contractor, which of the following cannot be specified in the written agreement? Require that floor times or attendance at sales meetings be mandatory When performing a CMA in an ever changing market, how far back should the broker look for comparable sales? 90 days Which of the following would be a credit to a seller on a closing statement? The sales price Smith County has determined enough people have brought or built homes near Pebble Mill Road, a dirt road. The country has decided to pave it to create an actual road. They would accomplish this by? approving special assessments for the properties in that area, as they would derive the most benefit for a paved road A buyer is concerned about flooding of a property due to the having been flooded out in a prior home, what should the broker advise the buyer Check the National Flood Zone Website A buyer has 2 properties of interest where one property is vacant land and the other is an existing VET clinic. The buyer decides to go ahead with the purchase of the vet clinic but wants to expand into parking lot, which should the agent, suggest to his buyer? That the buyer check with the local zoning department A buyer contracts (without contingency) to purchase a home priced at 200,000. The lender appraises the house at 180,000 and agrees to make an 80% loan-to-value loan. Excluding closing costs, how much cash must the buyer pay toward the purchase price? 56,000.00 A listing broker receives a call from the seller of a property that is currently under contract. The seller reports that he heard the listing agent for this property advise a potential buyer that the property was listed above market value. The offer made and accepted was lower than the listed price. The owner demands that the broker rebate him the listing agent's commission because the listing agent has failed the seller in her duty of? loyalty Two competing brokers decide to establish a standard commission rate. It is agreed that neither will list residential property at a rate less than the standard they have established. This practice is a violation of? Antitrust laws The characteristics of value include demand, utility, scarcity, and transferability The news has stated that the city is considering extending a highway through an area. It is merely one option of several, which the city has stated. A broker tells a buyer that the city will extend the road into an area that is mainly vacant land at this time. The broker has? Committed a material misrepresentation A broker tells homeowners that miniorities are buying in the area, and they better sell now to get the highest prices before the prices drop would likely be? Blockbusting Which of the following would be used to discuss terms before creating a contract? a letter of intent A real estate office, lender, and title services are owned by the same company and they are recommending that buyers and sellers utilize the services that the brokerage provides, can the brokerage be doing this? They may refer services as long as disclosed to the buyer the affiliated services, and that the buyer is not obligated to use any of the services Broker Sam is writing an offer for his buyer to purchase a 250,000.00 home and the commission that has been offered in the MLS is 6% with 60% going to the listing office, 40% to the selling office which Sam gets 75% of the commission, how much commission should the buyer figure in his offer to account for the commissions? $0 In a life estate and the life tenant dies, what happens to the property? The property reverts back to the grantor In preparing for a listing presentation for a newly constructed home, Susan needs to knows all but which one of the following on comparable homes? Assessor's value An option contract requires which of the following? Requires consideration to the seller A land owner lists his land for lease. He receives two pratically identical offers. One is from an oil & gas company that wants to drill and extract deposits under the land. The other is from a dairy farm operation. Both offers have no contingencies and are the same dollar amount. The listing agent should suggest? Take both offers; leases can be separated Regulation Z regulates print advertising for loans. What regulates the internet advertising? Regulation Z A brokerage advertising they work solely with buyers for VA loans. Is this a violation/misrepresentaion for veterans or Fair Housing Act? No, as they are willing to work with any buyer that can qualify for a VA loan A listing agent goes to an appointment to list a property. The seller states her Mom died, and the home had remained vacant for a year. The seller states that she and her 2 sisters are named in the trust. The seller also states that she doesn't hear a lot of noise from the freeway during rush hour but that there is a lot of noise going on the vacant lot next to the property, What is the listing agent top priority? Obtain a copy of the trust documents and tax record on the property A conditional use would allow for? the property use to deviate from strict zoning requirements A buyer wants to add onto the home into the area within the cities restrictions from the middle of the street, what would the buyer need to obtain? A variance A borrower has equal payments of principle and interest for 10 years and at the end of the loan they will have a balloon payment due. This is which type of loan? A partially amortized loan A city levied a five year special assessment two years ago to fund public improvements. Three more annual 1,800 installments remain to be paid by each property owner. A buyer is purchasing a property within the area of the improvements. Unless otherwise negotiate, what total assessment cost, if any, should the buyer expect to be responsible for paying? 5400 Through a foreclosure sale, a property failed to sell foe the amount of the loan that was still owed the lender, and the lender takes the borrower to court for the difference, what recourse is the lender seeking? a deficiency judgement A client wants to give a broker a listing to sell his house, but wants to retain the right to sell it to his brother without paying the broker a commission. What is the broker's most appropriate course of action? The broker should have him execute an exclusive agency-listing What duties does an agent owe to a customer that is visiting an open house that the agent is hosting? Honesty and fair dealing A brokerage advertising that they work solely with buyers for VA loans. Is this a violation/ misrepresentation for veterans or fair housing act? No, as they are willing to work with any buyer that can qualify for a VA loan. The seller excludes in the listing agreement her prize winning rose bushes from a raised planter, upon the accepted offer, there is no reference to the rose bushes being excluded. Prior to the closing the seller takes the rose bushes which upsets the buyers, this would be considered? Breach of contract A tenant with a disability may reasonably make reversible changes in the physical structure of an apartment to accommodate the tenant's disability if the? Tenant pays for the modification An owner has a commercial property that he acquired for 450,000.00 how much depreciation he has taken after 8 years? 92,307.69 Bank owns property, that was not encumbered. What type of deed will be offered? special warranty deed A couple is deciding between a partially amortizied loan and a non-amortized term loan. Both loans have the same interest rate and a 10 year term. With the partially amortized loan, they will have? smaller monthly payments and a larger balloon payment A property manager of an industrial property would be concerned with? environmental concerns The smith family has their agent submit an offer of a property with a deadline of acceptance of on April 7th, with the listing agent presenting the offer to the seller's and the seller's accepting the offer on April 6th, and sending the signed agreement to the buyer's agent at that time. The buyer's agent was out of town and not able to get the signed agreement to the buyers until April 8th. Meanwhile, the buyers find another property they prefer on April 7th and make an offer on that property through another brokerage company. That offer was immediately accepted by the other sellers. The buyers now claim that because they did not receive the written acceptance from the sellers until April 8 they are justified in making the second offer and can withdraw their earlier offer. Is this correct? No, the contract became binding when the buyer's agent was informed of the acceptance. Informing the buyer's agent is just as good as informing the buyer A conditional use permit allows an individual landowner to deviate from? zoning requirements The broker is trying to come up with an innovative marketing campaign to quickly move a new listing for her client. Which of the following ads would be legal under Truth-in-lending Act? An open house brochure which states, "Sellers will consider financing to qualified applicant" In the rectangular survey system, what does Range 3 west in relation to the 12th meridian most likely represent? A strip of land 12-18 miles west of the 12th meridian An investigation in a fair housing complaint or lawsuit has to prove which of the following? Only that discrimination occurred A buyer and seller agreed that the buyer could have inspections performed, and with the inspection report being delivered on April 28th with a deadline of April 30th noting the cracked wall and recommending a structural report, what should the buyer do? Object to the report and extend the inspections A sales associate takes a listing in the name of his sponsoring broker. When a dispute arises between the sales associate and the seller? The sponsoring broker may be responsible for the sales associate's actions A broker allowed one of her agents to complete an entire sale on his own, as she did not want to be bothered with checking paperwork. The agent unknowingly completed a fraudulent sale with straw buyers. Is this broker responsible, and why or why not. Is responsible because she is supported to supervise What would be a like for like property for a 1031 exchange? A two family residence for a small apartment building Many inherited herd grandmother's cottage. She has discovered it will be too expensive to renovate and decided to list it with ABC realty. It was struck by lightning yesterday and burned to the ground. After learning the insurance proceeds will be sufficient to build the cottage of her dreams, she has decided not to sell. Which of the following is true? Destruction of the subject matter of the agreement will likely terminate the contract between Mary and ABC Susan and James are in the same brokerage. Although Susan prefers selling real state on the Westside River, she said she would let James sell on the Westside and she would sell the properties on the Eastside. Would this violate any anti-trust laws? No, as long as they are in the same office Insurance value differs from market value in that? the value is only attributable to the replacement value of the structure. An agent is assisting a buyer in preparing an offer for a listing that she represents the seller, before the buyer can say just how much they are willing to pay, what should the broker tell the buyer? Don't tell me anything you wouldn't want the seller to know A person wants to rent a garage, but only $100.00 per month which type of lease would the broker advise them to have? gross lease A subject property has 2 bedrooms, 1 bath and a 2 car garage that may be valued at $10,000. A recent comparable property has 2 bedroom, 1 bath but does not have a 2 car garage, it does have a deck that would be worth $500.00 and sold for $138,000 what would the value of the subject property be? $147,500 How much would a buyer need to bring to closing on a $150,000 sales price at 80% LTV with $1,000 earnest money, the buyer agreed to pay title insurance $750.00, closing cost of $1,750, insurance $450.00, closing fee $280.00 $32,230.00 A broker has all his sales associates as independent contractors. He feels they all got their proper training from their pre licensing class and therefore doesn't do any training and just hands them a handbook. A sales associate has a fraudulent complaint against him. The sales associate says he didn't receive proper training from the Broker. The broker in his defense, said the sales agent should have come to him with any concerns. Who is liable? Both the agent and the broker An offer is written on a short sale, subject to lender approval fails to close on April 19, on May 10, the buyer wants to write a new offer on another property, what should the buyer do? terminate the offer as the short sale failed as the contingency has not been met A licensed salesperson who is not the listing agent is hosting an open house for the listing salesperson in the same real estate office. A couple, who may be buyers, arrives and asks numerous questions which the hosting salesperson answers to the best of her knowledge. If she does not know the answer, she volunteers to get it for the potential buyers. Unless prohibited by state law, the relationship between the hosting salesperson and the potential buyers is which of the following? Buyer agency by implied agency A buyer is purchasing a home that has an easement to allow a neighbor to access his garage on property behind the home, what happens to the easement? the neighbor may continue the use of the driveway as this is an easement what does a title commitment provide the current owners and encumbrances why would an investor benefit from a 1031 exchange defers capital gains taxes on investment properties an offer written contingent upon a loan at 6% or less, and the buyer can only obtain a loan at 6.12% would make the contract? void A purchase contract required that the property be free of tenants when the property conveyance occurred. On the day of closing, the tenants were still living in the property. Who is responsible for ensuring that the tenants vacated the property prior to closing? the seller an agent submits an offer on a property for $250,000.00 with a down payment of 20% and a closing in 30 days. How much earnest money would be required for the buyer to put up? $0.00- a purchase agreement is a bi-literal agreement and the promise for performance by both parties is the consideration a counter offer would be considered which of the following? a complete rejection of the full offer a seller gets an offer and counters, before the expiration of the counter and before it is accepted a better offer comes in that the seller would like to accept, in order to accept the second offer, what should the seller do? withdraw the counter before accepting the second offer when performing an appraisal on a residential property using the sales comparison approach, which of the following would not be taken into consideration? capitalization a tenant wanting to sign a commercial lease wants to keep the payment the same and that the rents will not go up. What type of lease would benefit the tenant? gross lease a property had a tenant on a month to month agreement, after closing the buyer shows up and the tenant is still residing in the property. Who is responsible to make sure that the tenant was removed prior to the closing? the seller is responsible which of the following is true about asbestos? encapsulation of damaged asbestos can be safer than removal buyer gives the agent $5000 earnest money for a property, but finds out from the lender that he must pay off a debt in the amount of $2000 to qualify for the mortgage loan. The buyer ask the broker if he can give a portion of the money back so he can pay off the debt, and the broker writes a check for $2000 out of the $5000 earnest money from the trust fund and gives it to the buyer. is this ok and why? No, the broker would need to write an amendment and have the seller agree 4 elements required of every contract CLOC: (C)ompetent Parties (L)egal Object (O)ffer and acceptance (C)onsideration valid contract contains all the essential elements and is binding and enforceable upon both parties to the contract. voidable contract has all of the elements necessary to create the contract and is enforceable but is subject to rescission by one of the parties to the contract. It is legally sufficient and recognized by law and, therefore, binding on the parties. However, it can be made void. But, if the injured party does not take any action, the contract is considered valid and enforceable. What can make contract generally voidable? - was a minor - was misled - did not agree to contract voluntarily - later found to have lacked competency at time of entering contract void contract Has no force or effect in law, so it will not be enforced in a court of law. A contract is void if it is missing any of the essential elements of a contract: competent parties, a legal object, mutual consent, consideration or, in some cases, being put in writing. Statute of Limitations specific period of time available, to take action to enforce a contract, set by state laches This principle allows a court to declare a contract unenforceable due to neglect or undue delay in bringing about a legal claim or asserting a right even though the Statute of Limitations has not expired. capacity to contract Each party to the contract must be legally competent in order to be capable of contracting. Statute of Frauds The purpose of this statute is to prevent perjury and dishonest conduct in proving the existence and terms of certain important contracts. parol evidence rule requires that evidence of the agreement cannot be received other than in writing. Spoken words (parol evidence) cannot be used in court to change, modify or contradict the terms of a written agreement that appears complete. material fact an important fact which significantly affects a person's decision to enter into the contract Coercion or duress forcing a person to do something against his will, including using threats to force a person to do something. Menace a show of an intention to inflict harm. Undue influence involves taking unfair advantage of a position of confidence or authority or of a person's distress or weakness of mind (such as when a person is intoxicated, ill, or enfeebled). consideration something of value given by one party in exchange for something of value from the other party to the contract. unilateral one-sided contract in that only one party has an obligation to perform under the contract. One party makes a promise in order to induce an act by the second party. bilateral when each party makes a promise. In such a contract, a promise is exchanged for a promise, and both parties are equally obligated to perform. Failure of either party to perform is a breach of the contract. executory contract a contract that is to be performed executed contract When both parties to the contract have fully performed the terms time is of the essence If the contract does not specify a time for performance, it is implied that performance is required within a reasonable time. waiver unilateral act with legal consequences Partial performance exists when one party performs part of the obligations and the other party relieves him of the obligation to perform the rest. Novation substitution of a new obligation for an existing one with the intent to cancel the existing one. Full performance all parties have performed all of their duties under the contract. Substantial performance when one party has substantially performed but failed to perform exactly as the contract requires mutual release cancellation of the contract rather than rescission unilateral rescission when an injured party goes to court to void a voidable contract. Upon finding that the contract had been voidable and should be declared void, the court would rescind the contract and attempt to restore each party to its condition in terms of money and property prior to the contract. Compensatory damages an amount determined by a court or arbitrator to cover the actual amount of the loss suffered as a result of the breach impossibility of performance This occurs when the subject matter of the contract is destroyed (e.g., in a fire), or when changes in law make performance illegal. operation of law when a contract is unenforceable due to bankruptcy or expiration of the time set in the Statute of Limitations. Liquidated damages amount determined in advance to be paid in the event of a breach Specific performance a legal procedure or action (court action or lawsuit) brought by either party to a contract to enforce the terms of the contract and force the defaulting party to perform the contract. mediation a third party tries to get the parties to the contract to agree to a resolution of their conflict, but neither party would have to agree to mediation or be bound by the mediation process. arbitration a third-party arbitrator serves as a judge, hearing both parties and making a decision which is binding on the parties. assignment transfer all interests and rights to others rescission terminate all obligations under the contract