Real Estate Concepts, Laws, and Loans: A Comprehensive Overview, Exams of Nursing

Download Real Estate Concepts, Laws, and Loans: A Comprehensive Overview and more Exams Nursing in PDF only on Docsity! Barney Fletcher Practice Exam 1 Questions and Answers 2024 Which would NOT be used in the capitalization approach? A. gross income B. operating expenses C. reproduction cost D. allowance for vacancy Correct Answer is C. reproduction cost A property had a land value of $40,000, a 2,000 square feet structure with a rebuilding cost of $70 per square foot, depreciation of $5,000 due to functional obsolescence and $1,500 due to physical depreciation. What would be the estimate of value for this property using the cost approach? A. $133,500 B. $140,000 C. $173,500 D. $180,000 Correct Answer is C. $173,500 2,000 sf x $70 = $140,000. $140,000 - $5,000 - $1,500 = $133,500. $133,500 + $40,000 = $173,500 A well maintained home in an area of run down homes would be an example of: A. physical depreciation B. functional obsolescence C. external obsolescence D. reproduction cost Correct Answer is C. external obsolescence An appraiser who was considering the effective age of a property with the chronological age would usually accept each of the following statements EXCEPT: A. the effective age may be less than the chronological age B. improvement with new materials could decrease the effective age C. modernizing or maintaining the building could decrease the effective age D. the effective age is usually greater than the chronological age Correct Answer is D. the effective age is usually greater than the chronological age Which is NOT true about a mechanic's lien? A. it can be filed for the value of the cost of the improvement B. it must be filed within a specified time period C. it would have to be enforced by the court D. its priority rights are determined by the date of recording Correct Answer is D. its priority rights are determined by the date of recording A property was assessed at 25% of market value. The rate was $5 per $1,000. If the homeowner actually paid $150, what was the total value of the property? A. $30,000 B. $82,500 C. $120,000 D. $133,000 Correct Answer is C. $120,000 $150 divided by .5% = $30,000. $30,000 divided by 25% = a total value of $120,000 A property had several different encumbrances recorded against it. Which of the following factors would indicate which would be paid off first? A. date of acknowledgement B. amount of the lien C. whether it was a voluntary or involuntary lien D. type of lien Correct Answer is D. type of lien A cooperative would take title to property under which of the following categories? A. tenants in common B. joint tenancy C. severalty D. tenancy by the entireties Correct Answer is C. severalty Which of the following items would result in a transfer of real estate through court action? A. police power B. constructive notice C. deed recordation D. eminent domain Correct Answer is D. eminent domain A property with a market value of $7,000 was assessed at 96% of value. The tax rate was 63 mills. What were the annual taxes? D. life estate Correct Answer is C. less than freehold estate Which of the following is the BEST definition of a buy down loan? A. when the buyer obtains a second mortgage, in order to lower the amount of the first mortgage on the new home B. the buyer submits a large earnest deposit to encourage the seller to accept a lower offer C. it lowers the interest rate between the 6th and 10th years D. the buyer pays a front end payment to lower the interest rate on the loan in order to qualify Correct Answer is D. the buyer pays a front end payment to lower the interest rate on the loan in order to qualify An $84,000 loan at 10% annual interest had principal and interest payments of $737.16 per month. How much of the second month's payment would be applied to principal? A. $37.16 B. $37.47 C. $699.69 D. $700.00 Correct Answer is B. $37.47 $84,000 x 10% = $8,400. $8,400 divided by 12 = $700. $737.16 - $700.00 = $37.47 An 18 year straight note had a total of $27,000 in interest over the term. The interest rate was 10% and loan was 75% of the sales price. What was the sales price? A. $15,000 B. $20,000 C. $23,850 D. $28,000 Correct Answer is B. $20,000 $27,000 divided by 18 = $1,500 interest per year. $1,500 divided by 10% = $15,000 divided by 75% = $20,000 price What type of loan is quickest for the buyer? A. conventional B. FHA C. VA D. assumption Correct Answer is D. assumption From a lender's point of view, which is the riskiest type of loan? A. conventional B. purchase money C. construction D. wraparound Correct Answer is C. construction A buyer borrowed $1,500 to purchase a hot tub. If the agreement between the parties was for the total principal and interest to be repaid in a single payment, what was the interest rate on the loan if the payment was $1,695? A. 11.3% B. 11.5% C. 13.0% D. 15.0% Correct Answer is C. 13.0% $1,695 - $1,500 = $195. $195 divided by $1,500 = interest rate of 13% In an installment land contract, what type title did the seller retain? A. joint tenancy B. legal C. equitable D. tenancy in common Correct Answer is B. legal A loan with a balance of $21,000 prior to the June 1 payment was figured with interest at 11% annually and monthly principal and interest payments of $571.80. There was a 1% pre payment penalty. The owner paid the June 1 payment and then paid off the balance of the loan. What was the pre payment penalty? A. $204 B. $206 C. $210 D. $215 Correct Answer is B. $206 $21,000 x 11% = $2,310 divided by 12 = $192.50. $571.80 - $192.50 = $379.30. $21,000 loan - $379.30 = a loan balance of $20,620.70. $20,620.70 x 1% = $206 A lender had a loan to value ratio of 97% on the first $25,000 of a sales price and 95% on the balance. If the sales price was $68,000, what was the down payment? A. $2,000 B. $2,900 C. $4,200 D. $5,440 Correct Answer is B. $2,900 $25,000 x 97% = $24,250. $68,000 - $25,000 = $43,000. $43,000 x 95% = $40,850. $24,250 + $40,850 = $65,100. The price of $68,000 - $65,100 = a down payment of $2,900 When an FHA 203B loan is obtained, which generally happens? A. an FHA appraiser appraises the property B. there is a maximum of 20 years allowed for the loan term C. FHA will guarantee a maximum of $27,500 in case of default D. FHA loans will normally allow the buyer to obtain a 2nd mortgage to cover the down payment Correct Answer is A. an FHA appraiser appraises the property Which of the following statements is true about the Federal National Mortgage Association ( FNMA)? A. it sells bonds to raise money to buy notes B. it makes loans to low income borrowers C. it is a government corporation D. it is an agency of HUD Correct Answer is A. it sells bonds to raise money to buy notes A loan for which of the following would NOT fall under Regulation Z? A. residential home B. a loan involving discount points C. shoe store in a commercial shopping strip D. a duplex Correct Answer is C. shoe store in a commercial shopping strip Which of the following items would be an example of a latent defect? A. a leaky faucet B. a leaky roof during heavy rain C. a cracked mirror D. a house with an outhouse out back Correct Answer is B. a leaky roof during heavy rain A salesperson was showing one of the broker's listings to some buyers. The prospective buyers told the salesperson they thought the zoning of the property had been changed A person invested $5,000 in a limited partnership. One of his concerns was the amount of his liability. Since he is one of the limited partners, can he be liable for more than his initial investment? A. no, because he is guaranteed a 25% return on his investment B. no, because he is only liable for his initial investment C. yes, because he is liable for three times the initial investment D. yes, because limited partners are responsible for a limited amount of all debts Correct Answer is B. no, because he is only liable for his initial investment Two brokers got into a fight over a commission. They appealed to the GREC to get it settled. What will the GREC do? A. report it to the Attorney General who will notify the GREC as to the correct actions to take B. report it to the local association of Realtors who will notify the GREC the correct actions to take C. the GREC will only seek to negotiate the problem if asked by the brokers in writing D. the GREC will NOT get involved in any commission disputes between licensees Correct Answer is D. the GREC will NOT get involved in any commission disputes between licensees Georgia's law that is focused on deceptive advertising is: A. an anti trust law B. Regulation Z C. UDTPA (Uniform Deceptive Trade Practices Act) D. FBPA (Fair Business Practices Act) Correct Answer is D. FBPA (Fair Business Practices Act) Someone sells real estate for another for a fee without a license. What could the GREC do in this case? A. revoke the license B. file criminal penalties against the violator C. issue a cease and desist order and impose a fine up to $1,000 a day D. ask the Attorney General for a restraining order to stop the person from acting as a licensee Correct Answer is C. issue a cease and desist order and impose a fine up to $1,000 a day ABC developers advertise, "For rent to anyone including those who are handicapped." May they advertise in this manner? A. no, this is a violation of Federal Fair Housing Laws B. no, this discriminates against the handicapped C. yes, it is exclusive to those who are handicapped D. yes, it is inclusive of everyone including the handicapped Correct Answer is D. yes, it is inclusive of everyone including the handicapped The Real Estate Research, Education and Recovery Fund may only make payments based on judgements to: A. brokers B. salespeople C. the commissioner D. non licensees Correct Answer is D. non licensees Sam, a FSBO, advertises his property for sale by saying "for sale to cuban buyers only." May he advertise in this manner? A. yes, as long as he does not own more than two homes at once and there is not a real estate firm involved in the transaction B. no, no one can ever discriminate on race according to Jones v. Mayer C. yes, any FSBO is exempt from Federal Fair Housing Laws D. no, individuals are not exempt from discriminating in advertising Correct Answer is D. no, individuals are not exempt from discriminating in advertising After taking the pre license class and passing the state exam, in applying for license, what type of documentation would be required? A. a Georgia's driver license B. a photo ID C. personal references D. letter about business background Correct Answer is B. a photo ID The authorities are investigating a violation of the law by a licensee. Which could happen? A. the local association of Realtors could revoke or suspend his license B. the GREC could revoke or suspend his license C. the GREC could impose criminal penalties D. the Attorney General could impose criminal penalties Correct Answer is B. the GREC could revoke or suspend his license There was a home listed under an exclusive right to sell agreement. Another broker went to show the house without notifying the listing broker. Was this a violation of the license law? A. yes, because only the listing broker can show the property B. yes, because the selling broker must first contact the listing broker in order to show the property C. no, because the selling broker has an implied contract to show the property D. no, because under an exclusive right to sell listing, everyone is authorized to sell Correct Answer is B. yes, because the selling broker must first contact the listing broker in order to show the property An agent was working with a buyer. The agent explained agency to the buyer and presented the buyer with an agency disclosure form as part of a sales contract for the buyer to sign. However, the buyer refused to sign. What should the agent do? A. refuse to work with the buyer B. inform the seller of the situation C. make a note and give it to the broker to be kept in the files D. refer the buyer to another agent Correct Answer is C. make a note and give it to the broker to be kept in the files A corporation set up a business to do office rental services. Which of the following acts could the members do without a real estate license? A. handle the leasing of its own property B. lease other companies' properties C. procure tenants for other owners D. receive referral fees from brokers but no actual commissions Correct Answer is A. handle the leasing of its own property In which of the following can a lender refuse to give a loan? A. the borrower is 80 years old and applying for a 40 year loan B. the borrowers do not have the required down payment C. a male borrower applying for a loan in an all female condo complex D. a baptist applying for a loan in a jewish community Correct Answer is B. the borrowers do not have the required down payment What type of foreclosure does a lien theory state provide? A. mortgage note B. judicial C. non judicial D. deficiency judgement Correct Answer is B. judicial