PSI National Exam: Real Estate Overview

A written agreement in which a purchaser a contract agrees to buy and a seller agrees to sell is called Antitrust laws prohibit competing brokers from all of the following When a sewer line is installed down a 1. boycotting other brokers in the marketplace. 2. dividing the market to restrict competition. 3. agreeing to set sales commissions and management rates. all current owners of real estate fronting on that road rural road, the cost will probably be shared by State laws differ on whether a buyer is a suicide that occurred in the house last year. entitled to know about A lawsuit for inverse condemnation may a homeowner be brought by When is racial discrimination in the rental Under no circumstances of rooms or apartments permitted? The real estate broker who is listing a the number of square feet in the building house for sale should personally verify Real property can be converted to Severance personal property by Prospective buyers made an offer on a Both contracts are valid 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? Although states make specific laws prior appropriation governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of The purpose of requiring an earnest money deposit in a real estate sales contract is to provide evidence of the buyer's intention to carry out the contract. A buyer is getting a fully amortized loan $409.20. for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) A borrower has defaulted on the demand immediate payment of the entire note mortgage. The mortgage contains an acceleration clause. This permits the lender to The FHA functions MOST like an insurance company 1. They are used to buy down interest rate. discount points 2. They are a function of the marketplace. 3. They are paid by either the buyer or the seller. When land is conveyed to a trustee, the do whatever is permitted under the trust agreement trustee may A prospective buyer made an offer to the owner withdraws the counteroffer before it is accepted. 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 While an agent is showing a listed the agreement does not comply with the Statute of Frauds 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 Earnest money should be deposited into in a timely manner, according to state laws a trust account A deed restriction is applicable to the all owners, present and future activities of An easement can be terminated by prescription Depreciation is calculated based on the cost of the building only Which of the following approaches MOST Market data reliably estimates the sales price of a single-family residence? A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? Seller The escrow officer or closing agent MUST IRS give information regarding the sales price and seller's social security number to A broker supplies the financing for a Agency coupled with an interest project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? If you own a building free and clear that is $1,150 worth $115,000 and want an annual return of 12%, what net income is needed each month? Usury laws were enacted to protect the borrower At the time of listing, the seller tells the tell potential buyers about the parties listing agent they are moving because the neighbor has loud parties every weekend. The agent should When one of the parties to an agreement breached fails to perform one of its conditions, that contract is deemed to be Which of the following is NOT a Buyer and seller must agree to appraised value consideration in the definition of market value? One common method for controlling the allowing a broker to designate separate salespeople within the company as legal problems created by conflict of interest in representatives of each of the clients. dual representation is Ownership of common stock in a an interest that is classified as personal property corporation gives At the closing on June 15, the buyer is Debit seller $300; credit buyer $300 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? Too much leverage may result in negative cash flow A major reason for buying and owning a a condominium tends to be more affordable condominium rather than a detached single-family home is that An adjustable rate loan should include all of the following elements Regulation Z requires that the borrower be fully informed of all of the following 1. margin 2. life-of-the-loan cap 3. index 1. loan fees. 2 .the origination fee. 3. the annual percentage rate A couple signed a lease on an apartment No notice is required for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term? The relationship in which the agent is fiduciary placed in the position of trust and confidence to the principal is known by the term A couple are moving to a new city. They Month-to-month lease 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? A broker says, while showing a rural an expression of opinion, or puffing, which could lead to misrepresentation property, "This property has the world's purest well water." This would be an example of A contract has been drawn which obliges an option contract 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 Errors and Omissions insurance covers unintentional misrepresentations the broker for The land description T3N, R4W Principal Rectangular survey. Meridian refers to what method of property description? All of the following are methods to straight-line method calculate the reproduction or replacement cost of a building EXCEPT The buyer is assuming a mortgage Credit buyer $110,000; debit seller $110,000 presently on the property in the amount of $110,000. What is the adjustment made at closing? A salesperson lists a property with a an agent to the broker and a subagent to the principal. contract that allows for subagency and dual agency. The salesperson is The amount of commission to be paid is agreed upon by the seller and agent on the contract. An appraiser MUST be licensed or $250,000 certified to handle Federally related work on residential property valued at more than An odorless, radioactive gas that can Radon cause cancer The document used in a real estate sale that establishes the legal rights of the buyer and seller is the purchase contract A prospective seller asks a salesperson to a competitive market analysis to determine the property's value. recommend a listing price for a property. The salesperson should suggest Two lots of the same size are sold on a Situs street. The lot on the corner sells for $20,000 more than the lot in the middle of the street. Which of the following characteristics MOST likely explains the price difference? An agency relationship between a management agreement property owner and a property manager is usually created by . On January 15, a seller paid $960 in $800 annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360day year and a 30-day month. Which of the following is NOT usually Special tax assessments prorated at closing Which of the following is usually prorated at closing? In MOST states, foreclosed property is 1. Homeowners association fees. 2. Property taxes. 3. Transferred homeowner's insurance. public auction sold through A commercial property lost value economic or external obsolescence because a recently constructed highway moved traffic away from the property. This is an example of A managing broker can be held all real estate activities of salespersons. responsible for What is the term used for the person or Mortgage broker organization who acts as an intermediary for the purpose of obtaining Financing? According to the Truth-in-Lending Act, if 1. cash price or amount of the loan any "trigger terms" are used in an ad, all 2. amount of down payment required of the following disclosures 3. number, amount, and frequency of payments MUST appear in the ad In an exclusive right-to-sell listing, an One owner lists the property for sale with how many brokers A seller tells the listing agent that her tell the seller to disclose the termite treatment on the property disclosure home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should When a principal authorizes an agent to perform a particular act or transaction, it is an example of a special agency The day after a broker's listing on a house he is no longer the listing agent expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that If conditions for purchase are included in Return of the property to the original owner a deed and these conditions are violated, what is the penalty? Which is true of BOTH special Deliquent payment is grounds for sale of property assessments and ad valorem taxes Why was the Jones vs. Mayer decision of By upholding the Civil Rights Act of 1866, the Supreme Court removed all 1968 important? exceptions to racial discrimination in housing An Environmental Impact Statement (EIS projects the impact on the environment of a proposed project. Which of the following BEST illustrates the Garden apartments located between a single-family residential neighborhood concept and intent of a buffer zone? and a shopping center. A broker has brought a ready, willing, and the seller accepts the offer able buyer to a seller. In MOST listing contracts, the broker has earned his commission when Which rule-of-thumb version is being GRM offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? A judgment has been properly recorded. constructive notice Any subsequent purchasers, whether they have actually examined the record or not, have been given When a property owner uses his home as mortgagor collateral for a loan and creates a lien in favor of the lender, title is held by the The buyer wants to make the purchase suggest the buyer ask a lawyer to furnish the wording offer contingent on a complex mortgage arrangement. The buyer's agent Who is drawing up the contract should The practice of inducing panic selling in a blockbusting. neighborhood for financial gain is The real estate contract for a specific impossibility of performance property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of The sellers have agreed to give the buyer a carpet allowance to replace the family room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard for pad and installation. If the family room is 22'6"x 15', how much will it cost the sellers (to the nearest cent)? $935.63 The Department of Housing and Urban require the buyer to acknowledge disclosure of the presence of any known lead Development estimates that most private paint homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, A tenant rented an apartment, signing a Holdover tenancy 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold goes the tenant have? How does a creditor who has obtained a Writ of execution judgment get satisfaction against a debtor who will not pay? Timeshare ownership programs MOST tenancy in common often use which of the following ownership forms? In every real estate transaction, a legal the same one used in prior transfers of the parcel, verified by a surveyor description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions? A landowner wishes to build a Conditional use permit or zoning varience neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? An environmental impact statement public health and safety typically describes the effects of a proposed project on factors such as Although states make specific laws water is scarce governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with property, or all water rights are controlled by the state under the doctrine or prior appropriation. The doctrine of prior appropriation is MOST likely to be followed in states where When more than one approach to value is Reconciliation applied to a property and different indications of value are produced, how should the final estimate of value be determined? When preparing a market data estimate 1. the date of sale of the comparables of value, which of the following 2. the amount of square footage categories of adjustment is essential? 3. the location of the property If all other factors are equal, in which business district zoned for a six-story office building location is a parking lot likely to bring the highest sales Parcels A, B, and C are located side by plottage side and owned by three different owners. A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner they would be worth $22,000 more than their individual values. This demonstrates which principle of value? A loan which requires the borrower to term loan pay interest only until the maturity date (or due date), and then pay the entire principal on the maturity date, is called a The real estate licensee who accepts an RESPA undisclosed fee for referring a buyer to a specific title company may be in violation of Which of the following events would property owners death AUTOMATICALLY cancel a listing agreement? Another term for the owner of a property client listed with your firm is the A contract has been drawn which obliges an option contract the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31. This is called An agreement to purchase that has NOT an executory contract yet closed is An amount of money, agreed to in writing liquidated damages by buyer and seller, that will serve as full compensation if one party does not live up to a sales contract is called 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