Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Ans, Exams of Real Estate Management

Download Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Ans and more Exams Real Estate Management in PDF only on Docsity! Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers You are the buyer's broker attending closing. You discover that your buyer was charged $225 for an appraisal for which the seller had agreed to pay. How should you handle this? A) Ignore it because all the paperwork has these numbers on it B) Stop the closing and demand all new settlement statements and good funds figures C) Suggest that, if your buyer agrees, the seller could give the buyer a personal check for this amount to settle this unfortunate oversight D) Demand that the listing broker pay this amount since the broker should have caught the error - correct answer The answer is suggest that, if the buyer agrees, the seller could give the buyer a personal check for this amount to settle this unfortunate oversight. Small corrections in money are allowed at closing. If the deed or other documents were not correct, they would have to be corrected before proceeding. In the case of the overlooked appraisal fee, having the seller give the buyer Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers a check is fine as long as all the parties agree to the solution. The tax reserve will show as a settlement entry for all of the following loans EXCEPT A) Veterans Affairs (VA) loans. B) new conventional loans. C) seller-carry second loans. D) Federal Housing Administration (FHA) loans. - correct answer A seller-carry second loan will not collect for tax reserves, as this is being collected in the first loan. All conventional, FHA, and VA loans will call for lender reserves to be collected. The broker's fee is normally shown on the settlement worksheet as A) debit seller, credit buyer. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers The seller's subtotal of debits is $132,456.28 and subtotal of credits is $142,333.26. This means the seller A) needs $142,333.26 in cash to close. B) needs $132,456.28 in cash to close. C) is bringing $9,876.98 to closing. D) will receive $9,876.98 at closing. - correct answer The answer is will receive $9,8786.98 at closing. Because the seller has more credits than debits, the seller receives the difference at closing; simply subtract. The broker's fee is normally shown on the settlement worksheet as A) debit seller, credit broker. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers B) debit seller, credit buyer. C) debit seller and buyer equally, credit the broker the full amount. D) debit seller, single entry because broker funds do not go into the trust account. - correct answer The answer is debit seller, credit broker. The broker's fee is a traditional seller expense. The broker only earns this if the property closes. All money was in the trust account for this sale, so the broker writes a check to move the money to broker's operating account. All of the following would be considered good funds EXCEPT A) a check on the broker's escrow account. B) a wire transfer to the broker's bank. C) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers a cashier's check from a commercial bank. D) a teller's check from a credit union. - correct answer The answer is a check on the broker's escrow account. Good funds are a cashier's check, teller's check, and wire transfer. Personal, business, and trust checks are not good funds. The amount and who pays the different costs at closing are determined by A) the Contract to Buy and Sell, as negotiated by the buyer and seller. B) the seller and buyer in the closing instructions. C) the lender because the lender is providing the funds. D) the brokers and the parties they represent through the closing instructions. - correct answer The answer is the Contract to Buy and Sell, as negotiated by the buyer and Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers The designated buyer's broker D) The designated listing broker - correct answer The answer is the designated listing broker. The broker who has been designated to represent a buyer or seller is responsible for the broker-represented party's closing statement. In this case, it is the listing broker who works with the seller. Who traditionally pays loan costs like discount points on a new loan? A) The seller B) The lender C) The broker D) The buyer - correct answer The answer is the buyer. Loan costs and other loan fees are traditionally paid by the borrower but can be negotiated to be a seller concession. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers The Contract to Buy and Sell determines who will pay and how much. The entry for purchase price on a seller-carry purchase is A) debit seller, credit buyer. B) credit seller, debit buyer. C) debit seller, credit broker. D) credit seller, debit broker. - correct answer The answer is credit seller, debit buyer. The purchase price is the same in all sales: the buyer pays (debit buyer) and the seller gets paid (credit seller). A nonresident seller of an income property for more than $100,000 would be charged what percent for withholding taxes? Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers A) 2 percent B) 3 percent C) 10 percent D) 4 percent - correct answer The answer is 2 percent. The Colorado nonresident withholding tax is 2 percent of the sales price. The Colorado documentary fee is A) $1 per $100,000. B) $.01 per $1,000. C) $1 per $1,000. D) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers the profit on the sale is more than $100,000. C) the sale price is more than $1,000,000. D) there is any profit on the sale. - correct answer The answer is the sale price is more than $100,000. Properties below this amount are excluded from withholding. Also, remember that the closing entity is required to collect this money (up to 2 percent of the sales price) or the seller's entire net proceeds, whichever is less. If a Colorado property sells for $263,900, what documentary fee will be paid when the warranty deed is recorded? A) $260.00 B) $26.00 C) $26.39 D) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers $263.90 - correct answer The answer is $26.39. The way to express the documentary fee is $0.01 per $100. The easiest way to calculate it is just to move the decimal four digits to the left. For this question, $26.39 or $263,900 × 0.0001 = $26.39. If a mortgagee's title policy for $225 is required, how will the settlement worksheet reflect these items? A) $225 debit buyer, credit lender B) $225 debit seller only C) $225 debit seller, $225 credit broker D) $225 debit buyer only - correct answer The answer is $225 debit buyer only. In a new loan, the buyer is responsible for paying for the mortgagee's policy. The bill will be paid from the gross loan, so the entry is a debit only for the buyer. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers Who normally is charged for the recording fee? A) The broker having it recorded B) The lender to protect her interest C) The party benefiting from the document D) The party signing the document - correct answer The answer is the party benefiting from the document. Recording fees are paid by the party benefiting from the recording. The buyer will pay to record the deed, and the seller will pay to release the deed of trust. A $97 water bill was paid in advance for the period from March 1 to June 1. For a closing on May 8, how will the settlement worksheet reflect this bill? A) $71.70 debit seller, credit buyer Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers could be a broker, attorney, or title company. The money is sent to the Department of Revenue. A small money error is found at closing. The best option is to A) stop the closing and demand all new settlement statements and good funds figures. B) ignore it because it is not that much money. C) demand that the listing broker pay this amount since she made the error. D) suggest that because it is a small amount and a personal check will satisfy both parties, a check outside the closing be used. - correct answer The answer is suggest that because it is a small amount and a personal check will satisfy both parties, a check outside the closing be used. While state law requires good funds be brought to closing, if a small mistake is discovered, it is permitted to correct this with cash or personal checks. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers All of the following could be considered a closing entity EXCEPT A) the attorney doing the closing. B) the Colorado Department of Revenue. C) the listing broker. D) the title insurance company. - correct answer The answer is the Colorado Department of Revenue. A closing entity can be the title company, the broker, or an attorney. This tax is then sent to the Colorado Department of Revenue. At closing, who is responsible for confirming the figures on the buyer's closing statement? A) The designated buyer's broker Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers B) The listing brokerage C) The designated listing broker D) Both designated brokers - correct answer The answer is the designated buyer's broker. The designated broker for each party is responsible for the closing statement for the party he represents. So while the listing brokerage and listing broker are responsible for the overall closing and the seller's closing statement, the designated buyer's broker is responsible for the buyer's closing statement. If the new loan amount is $70,330 and the total lender payouts are $35,326, the net loan proceeds are A) $35,004. B) $35,326. C) unknown. Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers The seller collected rent (in full) of $1,000 at the first of the month. The property is closing on June 7. How will the rent be entered on the settlement worksheet? A) $800 debit buyer, $800 credit seller B) $200 debit seller, $200 credit buyer C) $800 debit seller, $800 credit buyer D) $200 debit buyer, $200 credit seller - correct answer The answer is $800 debit seller, $800 credit buyer. Rent is collected in advance from the tenant; therefore, rent is always seller owes buyer (SOB) for the period the buyer will own the property. Because the seller only owned the property the first six days of the month, the buyer will be credited the rent for the remainder of the month. $1,000 ÷ 30 × 24 = $800 owed the buyer. The rent to be prorated is $1,000 ÷ 30 × 24 days = $800 (SOB) ( see rent formula desktop) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers On the Colorado side of the test, who owns the property on the day of closing? A) The seller B) The buyer C) Split at noon D) No one - correct answer The answer is the buyer. In Colorado closings, the buyer owns the property on the day of closing. A water bill is due in advance, and it has been paid for the month in the amount of $60. For a closing on April 21, how will the worksheet reflect this bill? A) $20 debit buyer, credit seller B) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers $20 debit seller, credit buyer C) $40 debit buyer, credit seller D) $40 debit seller, credit buyer - correct answer The answer is $20 debit buyer, credit seller. Water paid in advance is buyer owes seller (BOS). Because the closing is at the end of the month, the buyer will owe little side $20. $60 ÷ 30 × (30 - 20) 10 = $20 Water paid in advance for April = $60 (30 days) (water bill formula 2 desktop) There is a $1 notary fee for the warranty deed in a closing conducted by the broker. The settlement worksheet entry is A) $1 debit seller, $1 credit buyer. B) $1 debit seller. C) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers A) always charged to the seller. B) prorated to the date of closing. C) charged to the seller if assumed by the buyer. D) charged to the seller if paid off at closing. - correct answer The answer is charged to the seller if paid off at closing. Special taxes are not always charged to the seller. The buyer can agree to assume the amount owed, in which case, the amount will not show at closing. If the assessment is paid at closing, it will be paid by the seller —debit seller the full amount. Who normally is charged for a mortgagee's title insurance policy? A) The lender B) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers The buyer C) The seller D) The broker - correct answer The answer is the buyer. The lender makes the buyer purchase a title policy to protect the lender and to add the buyer to the coverage on the title, which is the mortgagee's policy; therefore, the mortgagee's policy is paid by the buyer. A water bill charged in advance that has not been paid will show on the settlement worksheet as A) debit seller and credit buyer full amount of the bill. B) debit seller and credit buyer the prorated amount. C) debit buyer and credit seller the prorated amount. D) Colorado Real Estate Closings and Settlement Midterm and Final Exam v3.0 Questions And Answers debit buyer prorated amount and debit seller the remaining amount of the bill. - correct answer The answer is debit buyer prorated amount and debit seller the remaining amount of the bill. At closing, this bill is past due, so this lien must be paid off. Because the bill overlaps both owners, each party is required to pay their portion.