National PSI Exam Practice Test Guide

National PSI EXAM PRACTICE TEST Real Estate law governing advertising applies to all of these EXCEPT: A. In house notes for showing B. Multiple listing service (MLS) C. communications with consumers D. Social Media A. In-house notes for showing are not seen by consumers an so do not have to follow state or federal laws. A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of : A. A structural defect B. A patent Defect C. a latent defect D. an environmental defect B. A patent defect is easily visible when inspecting a property. (another) term for material) An eligible veteran made an offer of $225,000 to purchase a home contingent upon obtaining a no-down payment U.S department of Veterans Affairs (VA) guaranteed loan. Three weeks after the offer was accepted, the VA issued a certificate of reasonable value (CRV) for the $222,000 for the property. In this case, the veteran may: A. withdraw from the sale with a three-point penalty B. withdraw from the sale on payment of a commission to the seller's broker C. purchase the property by making a $3,000 cash payment D. seek secondary funding for the $3,0000 C. When the purchase price of a property is greater than the VA-issued (CRV), the veteran may pay the difference in cash to purchase the property because secondary financing is somewhat restricted under VA regulations. General real estate property taxes levied for the operation of the government are called: A. special taxes B. ad valorem taxes C. improvement taxes D. special assessment taxes B. Under current Regulations, a U.S. department of Veteran Affairs (VA) loan is assumable if: A. for VA loans made after March 1, 1988 the VA must approve both the buyer and the assumption agreement before the loan may be assumed. A. The VA approves both the buyer and the assumption agreement B. the veteran agrees not to request a releases of liability for repayment C. the VA approves the buyer only D. the VA approves the assumption of the agreement only During the period of time after a real estate sales contract is signed, but before title actually passes, the status of the contract is: A. executory B. voidable C. executed D. unilateral A. A contract is in executory status when its terms of agreement have not yet been carried out. If there is a discrepancy between a residential lot size quoted in a listing contract and the actual lot size, the actual lot size that will prevail in a sales transaction will be found in : B. A. the MLS B. the survey C. the listing contract D. the deed The buyers secured a loan at 75% (LTV) ration. The interest rate was 7.125%, and the term was for 30 Years. The first month's interest payment was $477.82. What was the appraised value of 1/7 the property? C. A. $103.700 B. $80,475 C. $107,300 D. 79,239 $477.82x12=$5,733.84 annual interest $5,733.84/7.125%=$80,475 $80,475/75%=$107,300 A document that protects against hidden risk such as forgeries and loss due to defects in title, subject to specific exclusions, is called: A. A. a title insurance policy B. an abstract of title C. a chain of title D. a certificate of title Last month's loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest? B. $412.50 x 12 = $4,950(annual interest amount) $4,950 / $60,000 (loan balance) = 8.25% (0 0825) interest A. 7.75% B. 8.25% C, 8.5% D. 7.5% If, upon the receipt of an offer to purchase a property, the seller makes a counteroffer, the prospective buyer is: A. Countering an offer terminates the original offer and creates a new offer. A. relieved of the original offer, which is terminated B. relieved of the offer which is now void C. bound to accept the counteroffer D. bound by the original offer, which is still active The component of an adjustable rate mortgage (ARM) that limits the percentage that the interest rate may increase over a specific time period. usually a year is: A. the margin B. the life-of-the loan rate cap C. the payment cap D. the rate cap D. the rate cap limits the amount an ARM's interest rate may change over a specific period of time, usually a year. In MOST market ares, rents are determined by: A. the local apartment owner's association B. department of housing (HUD) C. a tenants union D. supply and demand factors D. The amount of properties and vacancy determine rental values A couple purchased a home for cash over 25 years ago. Today the receive monthly checks from a lender that supplement their retirement income. The couple MOST likely have: B. A. a home equity loan B. a reverse mortgage C. an interest -only loan D. an adjustable rate mortgage To find the value of a property, of the net operating income (NOI) and the capitalization rate are known, an appraiser using the income approach would : A. A. divide the NOI by the cap rate B. mulitiply the NOI by the cap rate C. divide the cap rate by the NOI D. mulitiply the effective gross income (EGI) by the cap rate 2/7 Poetenially resonsibke parties (PRP'S) are LEAST likeley to be: A. present owners B. hazard disposal operators C. past owners D. real estate licensees D. A contract that conveys the right to possess the real property of another but does not convey title is : A. a bill of sale B. a lease C. a dedication D. a quitclaim deed B The rent collected on a 9 Unit building is as follows: Three apartments, $550; three apartments, $600; three apartments, $650. There is a vacancy rate of of 4%, additional income of $2,400, and annual expenses of $5,000. With a cap rate of 9%, how much should the buyer pay for this property? A. Find NOI then Divide by cap rate A. $661,244 B. $717,866 C. $698,534 D. $773,422 Property mangers must be aware and knowledgeable of a variety of issues. When considering asbestos, radon, and urea formaldehyde, the manager should be aware they are all: A. classified as environmental hazards B. produced as a result of the natural decay of radioactive substances C. produced a result of the natural decay of organic substances D. classified as hazardous substances. A. Asbestos, Radon and Urea Formaldehyde are environmental hazards When a seller takes back a purchase money mortgage from a buyer: A. the seller agrees to collect the buyer's payments directly from the lender. B.the terms and conditions of the mortgage are included in the borrowers first mortgage. C. the terms and conditions of the mortgage must be set forth in writing. D. the seller and the buyer may enter into an enforceable oral agreement. A developer grants a local power company the right to install necessary transmission lines. This right is an example of a(n) A) license. B) easement in gross. C) easement by prescription. D) conditional use permit. C. In order for the purchase money mortgage to be enforceable, the terms and conditions, such as principal and interest, must be set forth in detail in writing. D. An easement in gross is a company's right to use another's land. A person who has complete control of a parcel of real estate is said to own: D. A. a life estate B. a defeasible fee estate C. a leasehold estate D. a fee simple estate the highest interest in real estate recognized by law is the fee simple or fee simple absolute estate. The essential elements of a contract include all of these except: A. Competent grantor is a requirement A. competent grantor B. consideration 3/7 C. offer and acceptance D. lawful objection Carbon Monoxide (CO) is NOT: A. CO is difficult for the human nose to detect because its odorless and colorless. A. easy to detect by smell B.quickly absorbed in the body C. a result of incomplete combustion D. a natural result of combustion If the gross rent multiplier of a property is 112 and the rent is $600 monthly, what is the value of the property? A. A. $67,200 B. $62,700 C. $76,200 D. $27,600 112 x 600=$67,200 The four unities of possession, interest, time, and title are associated with which of the following? A. joint tenancy B. severalty ownership C. Community property D. Tenants in common A. Which law requires any advertisement that references mortgage financing terms to contain certain disclosures. A. The truth in lending act requires trigger terms about mortgage financing. A. Truth in lending act B. Real estate settlement procedures act (RESPA) C. Fair Housing Act D. Equal Credit Opportunity Act (ECOA) MOST states require that listing and buyer representation contracts contain: A. a MLS clause B. a broker protection clause C. a definite contract termination date D. an automatic extension clause C The prices of homes currently on the market included in a (CMA) assist a seller's agent in: A. knowing what buyers have not been willing to pay for properties similar to subject property B. advising buyers on what to offer the subject properly C. setting a listing price with the seller in competition with similar properties currently on the market. D. establishing what other buyers were willing to pay for properties similar to the subject property. C. A salesperson who works for ABC realty was the buyer's agent for a property that was listed by XYZ realty. The seller agreed to pay the commission. From whom will the salesperson receive her commission check? B A. the principal broker of XYZ realty B. the principal broker of ABC realty C. Either principal broker D. directly from the buyer Two salespeople working for the same broker obtained offers on a property listed with their firm. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker 4/7 presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make an informed decision about the first offer. Which of the following is true? A. After the first offer was received, the broker should have told the salespeople that no additional offers would be accepted until the seller decided on the offer. B. The broker has no authority to withhold offers from the seller C. The broker was smart to protect the seller from getting into a negotiating battle over two offers C.The broker's actions are permissible provided the commission is split between the two salespeople. B The N 1/2 of the SW 1/2 of a section contains how many acres: A. 20 B. 60 C. 40 D. 80 80 Legal action that may be taken to enforce the terms of the contract is a *suit* : A. suit for money damages B. suit to quiet title C. suit for specific performance D. suit for possession C Discount points on a mortgage are computed as a percentage of : A. the closing cost B. the selling price C. the down payment D. the amount borrowed D. A building sold for $157,000 The broker's commisssion was 6% and was divided as follows: 10% to the listing person 50% of the balance to the selling broker. What was the listing booker's commission? B. 157,000 X 6% = 9420 9420 / 10% = 942 A. 1064 B. 942 C. 1124 D. 964 A real estate loan payable in periodic installments that are sufficient to pay the principal in full during the term of the loan is: A. an interest-only loan B. a partially amortized loan C. a straight loan D. fully amortized loan D. Which lien affects all real and personal property of a debtor: D. A general lien attaches to all of a debtor's real and personal property as opposed to a specific lien. A. involuntary B. specific C. Voluntary D. General A real estate broker was responsible for a chain of events that resulted in the sale of one of his clients properties. The broker's efforts are called: A A. procuring cause B. proffered offer 5/7 C. pro forma D. private offering Defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to the normal wear and tear on a property is called A. A. physical deterioration B. economic obsolesce C. functional obsolesce D. external obsolescence After closing expenses of $550 and a 6% commission was paid, the seller received a check for $149850. What was the sale price of the property? A. 100% - 6% = 94% $149,850 + 550 =$150,400 (needed before commission $150,400 / 94% = $160,000 A. $160,000 B. $159,424 C. $155,424 D. $150,400 Which of these is TRUE reading FICO scores: A. Scores tent to range from ratings numbered from 1 to 100 B. The higher the score, the better the loan product a borrower will qualify for. C. The lower the score, the better the loan product a borrower will qualify for D. Scores lower than 550 are the most desirable and excellent scores. B. The buyers secured an $82,000 loan at the 9.25% interest for 30 years. Their monthly payment is $674.59. How much of their first payment will be applied to the principal balance. D. $82,000 x 9.25% =7585 annual interest 7585 / 12 = $632.08 $674.59 - $632.08 = $42.51 A. $64.51 B. $785.55 C$632.08 D. $42.51 The principle of appraising, which states that the maximum value is achieved when the property is in harmony with it's surroundings, is the Principle of : A. highest and best use B. competition C. contribution D. Conformity D. the principle of conformity means that maximum value is realized if the use of land conforms to existing neighborhood standards. A section in the rectangular survey system contains: A. 160 acres per section B. 640 acres per section C. 160 government lots D. 36 townships B Tenancy with survivorship means A) the tenancy interest will be inherited. B) the tenancy interest will pass to the surviving tenants upon the death of one. C) the tenant's heirs are survivors. D) this is not a legal tenancy. All of these factors would be important in comparing properties under the sales comparison approach to value EXCEPT: A. differences in appearance and condition B. differences in size of the improvements and land B D 6/7 C. differences in dates f sale D. difference in original cost A brokerage represents the owner in the sale of the owner's property. Which of these events will terminate that agency relationship: A. the broker discovers that an adequate commission cannot be made due to the low market value of the property B. a fire destroys the property C. the broker engages other brokers to help sell the property D. the owner abandons the property. B A lender that charges a rate of interest in excess of that permitted by state law may be guilty of : A. truth in lending violations B. fraud C. usury D. misrepresentation Which of these would be classified as a general lien : A. Real estate property tax lien B.Judgment C. Property tax lien D. Mechanic's lien C B. A judgment lien is not a lien on a specific assets but on the assets of the debtor in general. The clause in a mortgage document that permits a lender to declare the entire debt payable if the borrower defaults on loan payment is: A. an alienation clause B. a defeasance clause C. an acceleration clause D. a subordination agreement C 7/7