PSI NJ Real Estate Practice Exam Study Guide 2023

PSI NJ Real Estate Practice Exam Study Guide 2023 38 Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond?: If you feel it is in your best interest, please do so. 39. What critical aspect of the property inspection process MUST licensees convey to prospective buyers?: Need for inspections to be completed within the time stated in the contract. 40. If the terms of a contract indicate that Party A will be obliged to perform her part of the contract only if Party B chooses to take a certain action, then the contract is a: unilateral contract in which only Party A has made a promise to perform 41. A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as: void. 42. A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called: an option contract. 43. When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should: have short deadlines. 44. A contract for the sale of a home has been signed by both parties. This contract will remain executory until: the transaction has closed. 45. Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE?: Both contracts are valid. 11 / 32 46. The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should they give the prospective buyer?: Counteroffer. 47. A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable?: The seller is heavily under the influence of alcohol at the time of signing. 48. An example of a contract terminated due to inability to perform would be one in which the: seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. 49. A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called: a contract. 50 A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have?: The buyer may sue the seller for specific performance. 51. A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if: the owner withdraws the counteroffer before it is accepted. 52. While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement may be unenforceable because: the agreement does not comply with the Statute of Frauds. 53. A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so?: The person appointed by the court to act for the disabled person must contract on his or her behalf. 13 / 32 54. A gross lease can be best defined as one where the tenant pays, as a part of the rent,: no operating expenses of the leased space. 55. A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the couple's needs?: Month-to-month lease. 56. In MOST states, foreclosed property is sold through: public auction. 57. An exception to title insurance coverage is: defects that clearly appear in the title search. 58. For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income?: Mortgage loan interest, local property taxes, mortgage loan origination fees. 59. Even with title insurance, the policyholder may still suffer losses arising from: and use change due to zoning ordinances. 60. The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing?: Credit buyer $110,000; debit seller $110,000. 61. At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing?: Debit seller $300; credit buyer $300. 62 A landlord may legally refuse to rent to a prospective tenant if the tenant: has ever been convicted of selling illegal drugs. 63. A broker represents a group of investors who purchase single family residences when they can be found at very low prices. Their offers are typically made with $500 deposits and 15 / 32 cash closings within 7 days of acceptance of the offers. When the last property closed, the investors suggested the broker keep the deposit money to be used for their next purchase, as yet not identified. What must the broker do with these deposit funds?: Return them to the purchasers. 64. Antitrust laws prohibit competing brokers from all of the following EXCEPT: receiving compensation from both the buyer and the seller. 65. An equal housing opportunity notice MUST be: displayed in the brokerage office. 66. A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not?: No, because it is appropriate to show any property for which the buyer is qualified. 67. Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising?: "Catholics preferred." 68. The Civil Rights Act of 1866 prohibits any type of discrimination based o: race. 69. Without checking the facts, a broker who is the seller's agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of: misrepresentation. 70. Failure of a real estate agent to comply with Fair Housing practices is punishable by: license revocation and criminal prosecution. 17 / 32 71. A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as: steering. 72. A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that: there is no dollar limit on damages paid. 73. An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000?: $90,426 required selling price= net funds required / 1- commission (10,000+75,000)/ (1-.06)= $90,426 74. If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30- year loan at 5-1/2%, or a 20-year loan at 4-1/2%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION TABLE.): $176,100 4 1/2 for 20 years= $6.35 per $1000 6.34(x)= $1000 x=$1000/634 = 157 157x1000= $157,000 5 1/2 for 30 years= $5.69 per $1000 5.6 9(x )= $1 00 0 x= 10 00/ 56