Understanding Real Estate Appraisal, Contracts, and Time Constraints, Exams of Real Estate Management

Download Understanding Real Estate Appraisal, Contracts, and Time Constraints and more Exams Real Estate Management in PDF only on Docsity! 1 OKLAHOMA REAL ESTATE EXAM PREP 2024 WHAT TYPE OF CONTRACT IS A REAL ESTATE OPTION CONTRACT? - ANS>> UNILATERAL CONTRACT DURING AN APPRAISAL OF A RESIDENTIAL PROPERTY AN APPRAISER ESTIMATES THE COST OF REBUILDING THE SUBJECT PROPERTY SO THAT IT IS IDENTICAL TO ITS CURRENT SIZE AND CONDITION IS AN EXAMPLE OF WHAT TYPE OF APPRAISAL PRINCIPLE? - ANS>> SUBSTITUTION ACCORDING TO THE STATUTE OF FRAUDS IN ORDER FOR A REAL ESTATE SALES CONTRACT TO BE ENFORCEABLE IN COURT THEY MUST BE - ANS>> IN WRITING WHICH OF THE FOLLOWING TERMS IDENTIFIES AN ELEMENT THAT IS ESSENTIAL TO CREATING A VALID REAL ESTATE SALES CONTRACT? - ANS>> LEGAL PURPOSE DEFINE APPRAISED VALUE - ANS>> An evaluation of a property's value based on a given point in time that is performed by a professional appraiser during the mortgage origination process. DEFINE "TIME IS OF THE ESSENCE" CLAUSE IN A REAL ESTATE SALES CONTRACT - ANS>> Generally, a contract for the sale of real property containing the phrase "time is of the essence" creates the requirement that both parties to the contract perform within the time specified. AS USED IN PROPERTY MANAGEMENT THE TERM "CONSTRUCTIVE EVICTION" IS BEST UNDERSTOOD TO MEAN - ANS>> A TENANT HAS LEFT A PROPERTY AFTER A LANDLORD HAS ALLOWED IT TO BECOME UNINHABITABLE THE BEST STATEMENT ABOUT THE RELATIONSHIP BETWEEN A PROPERTY MORTGAGE AND A PROMISSORY NOTE IS THAT THE MORTGAGE - ANS>> CREATES A PROPERTY LIEN AS SECURITY FOR THE NOTE WHICH GIVES THE DETAILS OF BOTH THE AMOUNT OF THE DEBT AND THE TERMS OF REPAYMENT AN EXAMPLE OF A PROPERTY SUFFERING FROM EXTERNAL (ECONOMIC) OBSOLESCENCE IS - ANS>> A CAR DEALERSHIP LOCATED DOWNWIND FROM A NEW HOG FARM 2 WHAT TYPE OF OWNERSHIP INTEREST APPLIES TO PARTIES WHO OWN REAL PROPERTY AS TENANTS IN COMMON - ANS>> THE OWNERSHIP INTERESTS MAY BE CONVEYED SEPARATELY A HOMEOWNER WITHOUT ANY LIENS ON THE PROPERTY ARRANGES FOR A LOAN THAT PROVIDES A SERIES OF SMALL MONTHLY PAYMENTS TO THE OWNER RATHER THAN A SINGLE LARGE PAYMENT THAT MUST BE PAID BACK IN INSTALLMENTS - ANS>> REVERSE ANNUITY A BUYER ARRANGES FOR A $90,000 MORTGAGE LOAN WITH AN ANNUAL INTEREST RATE OF 8% AND A FIXED MONTHLY PAYMENT OF $745. HOW MUCH OF THE PAYMENT WILL REPRESENT PRINCIPAL? - ANS>> 90,000 X .08 = 7,200 (INT PER YEAR) 7,200/12 = 600 INT PER FIRST MONTH 745-600= 145 PRINCIPAL THE PROVISIONS OF THE AMERICANS WITH DISABILITIES ACT (ADA) APPLY TO OWNERS OF WHAT TYPES OF PROPERTIES - ANS>> MULTIPLEX THEATERS, APARTMENT BUILDINGS ETC ACCESS RAMPS TO GOVERNMENT BUILDINGS, GRAB BARS IN PUBLIC REST ROOMS AND A ROW OF PAY PHONES WITH SEVERAL PLACED LOWER ARE EXAMPLES OF COMPLIANCE WITH WHAT FEDERAL LAW - ANS>> AMERICANS WITH DISABILITIES ACT (ADA) PUFFING IS AN EXAGGERATION OF GOOD POINTS. AN EXAMPLE IS - ANS>> BEST VIEW OF THE MOUNTAINS IN TOWN MAXIMUM AMOUNTS OF ANY PROFIT THAT WOULD BE EXEMPT FROM CAPITAL GAINS TAX IS - ANS>> 250,000 FOR SINGLE FILERS 500,000 FOR MARRIED FILING JOINT UNDER FEDERAL FAIR HOUSING ACT REQUIREMENTS A PROPERTY MANAGER OF A RESIDENTIAL MULTI-UNIT PROPERTY MAY LEGALLY REFUSE TO APPROVE RENTING A UNIT IN A PROPERTY EXCLUSIVELY OCCUPIED BY PERSONS OVER 65 TO - ANS>> A SINGLE PARENT WITH AN INFANT CHILD WHAT TYPE OF EXPENSES WILL A FIRM MOST LIKELY BE RESPONSIBLE FOR PAYING FOR A NEWLY LICENSED SALES PERSON WHO HAS CONTRACTED TO WORK FOR A BROKER OF THE FIRM - ANS>> OFFICE SPACE RENT AND TELEPHONE WHAT BEST DEFINES A MATERIAL DEFECT - ANS>> A DEFECT THAT WOULD AFFECT A BUYERS DECISION TO PURCHASE OR AFFECT THE PROPERTIES VALUE 5 The Veteran's Administration assists numerous qualified mortgage loan applicants because it - ANS>> GUARANTEES loans made by approved lenders Albert has a mortgage on his property. Ten years after he receives his mortgage, the note expires, and he pays a lump sum of the principal. What type of promissory note did Albert have? - ANS>> BALLOON The Truth in Lending Act (TILA) of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed. - ANS>> REGULATION Z Which of the following best describes a "Blanket Mortgage"? - ANS>> A mortgage that COVERS more than one piece of property In evaluating a loan application, a mortgage lender is most concerned about - ANS>> FINANCIAL CAPABILITY AND VALUE OF COLLATERAL Of the following sources of loan money, which does not service their loans? - ANS>> SECONDARY MORTGAGE LENDERS FNMA VA LIFE INS PENSION FUNDS GNMA FHLMC Albert is a home-builder and seeks financing from his local bank to fund his houses so he can sell them to a customer in the near future. What type of financing did Albert receive? - ANS>> BRIDGE LOAN A stream running north to south separates two parcels of land. The owner of the eastern bank claims all the water to the western bank. The owner of the western bank can legally dispute this claim based on what Doctrine? - ANS>> RIPARIAN RIGHTS - stream or creek not navigable When land is torn from a bank by the action of a violent river it is called - ANS>> AVULSION A fusion of land use laws and local land use objectives and strategies. - ANS>> DESCRIBES A "MASTER PLAN" If an area containing a service station were changed to residential zoning, the service station - ANS>> IS CONSIDERED LEGAL NONCONFORMING USE 6 When a municipality issues a building code that requires a hot water heater be placed a minimum of eighteen (18) inches above floor level, the municipality is exercising what Government Right? - ANS>> POLICE POWER The supreme power inherent in the state to take land from the owner by due process of the law when necessary for the state's use in the public welfare is - ANS>> EMINENT DOMAIN A property owner in a development is required to have a shake roof. This requirement is most likely to come from - ANS>> DEED RESTRICTIONS OR CONDITIONS A Realtor goes through the entire transaction with a Buyer without signing a contract to represent the Buyer. Is this legal; and if so, what type of agency exists? - ANS>> YES IMPLIED AGENCY A Sales Associate lists a property. Three weeks later, the Sales Associate is tragically killed in a car accident on the way to show the property. What is the status of the Listing Contract? - ANS>> STAYS WITH THE BROKER "Without both parties' written consent, the broker is prohibited from representing both a seller and a buyer in the same transaction," defines: - ANS>> DUAL AGENCY One who has limited authority granted to him or her through a principal. The relationship with the principal is not expected to be continuous. The listing contract creates a special agency relationship with the seller. The authority is limited to the duties given in the listing contract, and the relationship ends when the terms have been fulfilled. - ANS>> SPECIAL AGENT A Seller and a Broker signed a contract to market a house. After 63 days on the market, the Seller called the Broker to say, "Thanks," but the Seller had found a Buyer. What kind of listing is this? - ANS>> EXCLUSIVE AGENCY AGREEMENT - Exclusive Agency Listing is a contract where the seller agrees to pay ONE listing agent a commission. However if the owner sells it themselves the agent gets NO commission. The agent has to prove they were the procuring cause of the buyer. The two (2) types of actual authority in the common law of agency are - ANS>> EXPRESSED AND IMPLIED Salespersons are responsible to whom? - ANS>> THE BROKER WHO HOLDS THEIR LICENSE Agents having a wide authority to conduct a series of transactions of a continuous nature on behalf of their clients are - ANS>> GENERAL AGENT 7 Which term describes a "relationship of trust and confidence between a principal and an agent?" - ANS>> FIDUCIARY - A fiduciary relationship is a legal relationship that creates a position of trust and confidence The acronym ACOLD will help you remember your duties in a fiduciary relationship. - ANS>> ACCOUNTABLE CARE / SKILL OBEY LEGAL INSTRUCTIONS LOYAL TO CLIENT DISCLOSE PERTINENT INFO Which of the following is NOT a type of possible Agency Relationship in a transaction unless all parties acknowledge the relationship? - ANS>> DUAL AGENCY - BUYER AND SELLER MUST ACKNOWLEDGE AND AGREE In agency the fiduciary duty requires the agent to - ANS>> LOOK OUT FOR THE PRINCIPALS BEST INTEREST An agent fails to discover crumbling tiles on the basement ceiling beneath a bathroom. The agent sells the property, and the buyer later sues the agent for not discovering and disclosing a clearly visible and obvious problem. In this case, the agent - ANS>> HAS EXPOSURE TO NEGLIGENT MISREPRESENTATION The Ad reads, "Your new home has the most stunning view in the county." Is there a problem? - ANS>> YES THIS IS PUFFING The Buyer discovers, after closing, that the Seller failed to disclose several problems existing with the property. The Buyer demands the Seller take back the property and refund the Buyer's money. The Seller refuses. What is the probable outcome? - ANS>> SELLER MAY BE HELD LIABLE FOR INTENTIONAL MISREPRESENTATION, CIVIL REMEDY, COST OF REPAIRS AND COURT AND ATTORNEY FEES Albert sells his home to Ben which was built in 1977. Because this house was built prior to 1978, Albert is required to - ANS>> PROVIDE A SIGNED LED BASED PAINT DISCLOSURE The broker lists his neighbor's house on an exclusive right to sell listing. The commission is determined by - ANS>> NEGOTIATION BETWEEN BROKER AND OWNER OF THE HOUSE Which of the following types of listings are considered the most desirable for a broker? - ANS>> Exclusive Right to sell Listing- Exclusive Right to Sell Listing is a contract where the Owner agrees to sell the property in question through the Listing Broker. The Listing Broker does not need to show that he 10 Sam Seller sold his duplex for the sum of $40,635 on an assumption type sale. When the transaction was closed, the mortgage assumed was $20,000. What was the cost of documentary tax stamps attached to the deed - ANS>> .75 FOR EVERY $500 THEREFORE 40,635/500=81.27 81.25*.75=60.96 (ROUND UP) The advertisement said the land measured "3/4 of a mile by 3/4 of a mile." How may acres of land are for sale? - ANS>> 5,280 FT IN A MILE 43,560 SQ FT IN AN ACRE 1/4 ACRE = 5280/4 = 1320 FT 3/4 ACRE = 1320 X 3 = 3960 FT 3/4 BY 3/4 = 1320 X 1320 = 15,681,600 15,681,600/ 43,560 = 360 ACRES A LOT 75FT BY 145FT IS WHAT PART OF AN ACRE? - ANS>> 75*145=10,875 10,875 / 43,560 =.25 1/4 ACRE You list a lot which is 170 feet by 300 feet. How many acres are in the lot - ANS>> 170*300=51,000 51,000 / 43650 = 1.17 1.17 ACRES A property has a net income of $50,000, interest payments of $35,000, principal payments of $3,000, and annual cost recovery of $7,000. The property's tax rate is 28%. What is the property's annual tax on income? - ANS>> TOTAL EXPENSES = 35,000+7,000 = 42,000 50,000-42,000=8,000 8,000*28% = 2,240 At a restaurant you overhear a Realtor bragging about the $12,000 commission on an 8% rate. You wonder for how much did the house sell - ANS>> 12,000/8% = 150,000 A borrower grosses $4,000 per month and pays $600 monthly for debt obligations. What monthly payment for housing expenses (principal, interest, taxes, insurance) can this person afford based on an FHA debt ratio of 41%? - ANS>> 4,000 * 41% = 1,640 1,640 - 600 = 1,040 The $250,000 house is taxed at 80% Assessed Value. If the house is taxed at $27 per $1,000, what is the MONTHLY property tax? - ANS>> 250,000*80%=200,000 200,000/1,000=200 200*27=5,400 ANNUAL 5,400/12=450 MONTHLY 11 A husband and wife own a piece of property that measures 1 mile by 1 mile. The couple owns how many acres - ANS>> 640 ACRES A SECTION IS 1 MILE BY 1 MILE WHICH EQUALS 640 ACRES The tenant pays rent plus all or part of the property charges" defines - ANS>> NET LEASE The landlord sells a 24 unit apartment complex. The Grantee ... - ANS>> DOES NOTHING BECAUSE THE SALE DOES NOT TERMINATE THE LEASE This program permits investors to defer taxes - ANS>> 1031 EXCHANGE Select the choice which is NOT a requirement for a valid lease - ANS>> DEFINES TERMS OF TERMINATION A tenant obtains a low rental rate for a building, but agrees to pay all operating expenses. This is an example of a - ANS>> NET LEASE If you engage in the sale of Real Estate before OREC issues your license, what may be the consequences? - ANS>> FINE OF NOT MORE THAN $1,000 OR IMPRISONMENT NOT MORE THAN 6 MONTHS IN COUNTY JAIL OR BY BOTH The Oklahoma Real Estate Commission shall have the powers and duties of - ANS>> imposing administrative fines in accordance with state statutes With a Tenancy at Will, how many days notice is mandated to terminate the tenancy? - ANS>> 30 DAYS The landlord needs to serve the tenant with a notice to terminate the tenancy. To whom shall notice be served? - ANS>> THE TENANT OR FAMILY MEMBER OVER AGE OF 12 Earl is a real estate broker and has recently bought a new home and his personal residence address has now changed. Earl MUST... - ANS>> NOTIFY THE COMMISSION WITHIN 10 DAYS THERE ARE HOW MANY MEMBERS ON THE REAL ESTATE COMMISSION - ANS>> 7 MEMBERS OF REAL ESTATE COMMISSION SHALL BE MADE UP OF - ANS>> 5 WILL BE LICENSED REAL ESTATE BROKERS 1 WILL BE A LAY PERSON 1 WILL BE A MEMBER OF AN APPROVED REAL ESTATE SCHOOL 12 The Oklahoma Real Estate Commission shall - ANS>> CONDUCT AN ANNUAL PERFORMANCE REVIEW OF THE EXECUTIVE DIRECTOR AND SUBMIT THE REPORT TO THE LEGISLATURE A Sales Associate has a license due to expire this month. By what day and time must renewals be filed? - ANS>> MIDNIGHT OF THE DATE ON WHICH THE LICENSE IS DUE TO EXPIRE WHICH IS MIDNIGHT OF THE LAST DAY OF THE MONTH OF THE DESIGNATED TERM When does a security deposit revert to the landlord in consideration if the former tenant has not made a written demand - ANS>> AFTER 6 MONTHS What action, if any, must a broker take if he or she is involved in a transaction but did not prepare the contract to purchase document - ANS>> The broker must still document that he or she has complied with the disclosure requirements Earl is a real estate broker and has recently changed his business address, Earl has notified the Commission in the proper time frame and now must - ANS>> pay $25 for each license to be changed If a fine imposed by OREC is not paid within 30 days, what are the consequences. - ANS>> THE FINES SHALL DOUBLE AND THE LICENSEE SHALL HAVE AN ADDITIONAL 30 DAYS A person is not required to hold a real estate license to - ANS>> AN INVESTOR SEARCHING FOR A PROPERTY TO BUY BECAUSE THE INVESTOR IS NOT ACTING ON BEHALF OF ANOTHER PARTY Who is responsible for the accuracy of the Residential Property Condition Disclosure Statement? - ANS>> SELLER At what date is the Residential Property Condition Disclosure Statement no longer valid? - ANS>> 180 DAYS AFTER THE SELLER COMPLETES IT Oklahoma Real Estate Commission has been recreated to continue until July 1, 2013 under the provisions of what law - ANS>> OKLAHOMA SUNSET ACT What is a Residential Property Condition DISCLAIMER STATEMENT? - ANS>> A STATEMENT FROM AN OWNER THAT HAS NEVER OCCUPIED THE PROPERTY Which of the following items could serve as a lien by the landlord against a tenant who has refused to pay rent? - ANS>> BAGGAGE OR OTHER PROPERTY BELONGING TO THE TENANT THAT MAY BE IN THE RENTAL UNIT 15 Mary wanted to sell her house which had a serious leak in the roof. The broker told Mary that she must replace the roof in order for the house to sell. The leaky roof is considered what kind of depreciation - ANS>> PHYSICAL DETERIORATION In appraisal, comparable properties are those which - ANS>> can be adjusted to reasonbly match the subject property The County Board of Supervisors announced State and Federal Funding to widen a two lane road to four lanes. Within a month, property values along the route yielded a 10% gain. This an example of which Principle of Valuation? - ANS>> PROGRESSION AND REGRESSION Which of the following should an appraiser's estimate of market value reflect? - ANS>> An appraisal is an unbiased or objective opinion of value supported by data and following approved methods or the most likely price that a probable buyer will pay for a property in an open market sale. A asked you to appraise their property. This property had no monthly income and had no comparables in the market. You would most likely use the - ANS>> COST APPROACH (REPLACEMENT) The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the replacement cost of the building, less depreciation. - ANS>> COST (REPLACEMENT) APPROACH The test for Highest and Best Use includes all of the following - ANS>> The test for Highest and Best Use as if vacant includes: Physically possible, Financially feasible, legally permissible, and maximally productive (asks the question what is the best use for the property) The net operating income of a small apartment building is $20,000. The CAP rate on this project is 13%. What is the indicated value of the property? - ANS>> INCOME / CAP RATE = VALUE 20,000/13% = 154,000 APPROXIMATELY CAP RATE FORMULA - ANS>> CAP RATE = NET ANNUAL OPERATING INCOME / VALUE The function of a board of equalization is to - ANS>> minimize wide discrepancies of assessed values within the district Which of the following reflects the stages through which a neighborhood passes - ANS>> Growth, stability, decline and revitalization 16 A business buyer wants to acquire a business in its totality, including the business identity and all rights, obligations, liabilities, and assets. The type of transaction that would accomplish this aim is - ANS>> COMMERCIAL MORTGAGE Albert, who is a real estate broker, has been funneling buyers of a certain race to a certain part of the city. This practice is known as - ANS>> STEERING Typically before a mortgage company will finance a home they will want to make sure there are no encroachments on the property they are financing. To check for any encroachments the mortgage company should order a - ANS>> SURVEY According to the common law of agency, which of the following statements about the fiduciary obligation of confidentiality is CORRECT when an agent represents a principal in a real estate transaction - ANS>> OUTLIVES THE TERMINATION OF THE AGENCY RELATIONSHIP Which of the following terms identifies the clause that allows a lender to call the entire remaining loan balance due in the event of buyer default? - ANS>> ACCELERATION A property deed indicates that the easternmost boundary includes a fifteen-foot right of way allowing owners farther from the main road the right to cross the property. The property across which the others are allowed to pass is known as a - ANS>> SERVIENT TENANT Which of the following interests in real property does a prospective buyer receive once an offer to purchase becomes a binding offer? - ANS>> EQUITABLE TITLE Which of the following appraisal methods would be the MOST appropriate one to use in the valuation of a twenty-year-old post office? - ANS>> COST APPROACH Which of the following general property conditions is MOST likely to be categorized as material - ANS>> CRACKED FOUNDATION The type of legal description that refers to a point of beginning, may refer to monuments, and uses distances and directions to come back to the point of beginning is - ANS>> METES AND BOUNDS When preparing a competitive market analysis (CMA), an amenity worth $5,000 in a comparable property is BEST handled in which of the following ways - ANS>> SUBTRACTED FROM COMPARABLE A property owner clears brush along a property line that borders an unimproved, wooded lot and puts a fence three feet inside the neighboring property. This fence is an example of - ANS>> ENCROACHMENT 17 WHAT is the physical intrusion of a structure or improvement on the land of another ALSO A FORM OF TRESPASS - ANS>> Encroachment Examples include a fence or driveway over the property line Which of the following terms identifies a property owner who has entered into an agency relationship with a licensee? - ANS>> PRINCIPAL : According to the common law of agency, a licensee has which of the following obligations to an individual that prefers to remain a customer rather than become a client? - ANS>> HONESTY AND FAIR DEALING A couple with a modest combined income and strong employment history is having difficulty qualifying for a conventional loan to purchase a home due to their income and limited cash. Which of the following sources of real estate funding is MOST likely to meet their needs? - ANS>> FHA LOW DOWN PAYMENT A licensee takes an "as-is" listing on a residential property downhill from an abandoned industrial site. The licensee finds a buyer for the property who discovers after closing that residual industrial waste has been leaching into the house's water supply for several years. In this situation, which of the following parties is MOST likely to have liability for the expense of correcting this problem - ANS>> SELLER AND SELLERS AGENT The Sherman Antitrust Act specifically prohibits which of the following activities in the course of a real estate transaction - ANS>> PRICE FIXING A property owner built a house on a 7,500 square foot lot several years prior to the enactment of new zoning that requires at least 20,000 square feet for residential properties in that area. A CORRECT statement about this situation is that the - ANS>> THE HOUSE WILL BE 'GRANDFATHERED" AND ALLOWED TO REMAIN Which of the following statements represents a PRIMARY purpose of the Fair Credit Reporting Act - ANS>> TO PROTECT CONSUMERS FROM INACCURATE CREDIT REPORTING BY ALLOWING THEM TO INSPECT THEIR CREDIT REPORT AND MAKE CORRECTIONS WHAT IS THE BEST WAY TO TAKE TITLE FOR A MARRIED COUPLE SO THAT 1. THEY MAY NOT SELL OR GIVE AWAY HIS/ HER PORTION WITHOUT CONSENT OF THE SPOUSE 2. WILL NOT GO TO HEIRS OF DECEASED SPOUSE BUT RATHER TO THE REMAINING SPOUSE - ANS>> TENANTS ENTIRETY (ONLY CREATED BY MARRIED PERSONS)