Questions and Answers
In most cases, broker compensation, as a percentage of home price, falls somewhere between:
A Christian organization can legally rent to only Christian tenants under the federal Fair Housing Act.
True
What happens to trade fixtures after a business moves out of a leased property?
The tenant removes their trade fixtures and takes them upon moving out.
What is the maximum amount of additional long-term obligations a borrower with a gross monthly income of $3,000 may have if they want a conforming loan with a monthly PITI payment of $800?
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What is the area of a square bedroom that measures 10 feet by 10 feet?
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Which of these is an economic characteristic that makes land a distinctive commodity?
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In a fixed-rate mortgage that is fully amortized, what is the total amount of interest to be paid?
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Renting a room in a house occupied by the owner is exempt from the federal Fair Housing Act.
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The Americans with Disabilities Act applies to what type of accommodations?
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What gives the government the right to seize private property from citizens?
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What is the third physical characteristic of land, in addition to being indestructible and non-homogenous?
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Which statement BEST defines the term contingency?
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If a borrower is behind on payments, what does the acceleration clause allow the lender to do?
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What does a metes and bounds legal description always return to?
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What should a license holder do if a client instructs them to do something that would discriminate against a protected class?
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What is a novation?
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How much of a capital gains tax will a couple be required to pay after selling their home for $950,000, which they bought for $400,000?
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Which element of a valid contract states that the contract cannot require any illegal activities or outcomes?
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What is an example of a situation where a borrower has no legal recourse due to time elapsed since an incident?
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What will Pedro pay in ad valorem taxes this year if he bought his house for $370,000 with an assessed value of $290,000 and a tax rate of 2.375%?
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What describes a potentially valid contract in which at least one party has the option to rescind?
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What is another name for an origination fee in mortgages?
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What is it called when both parties in an agency agreement agree to terminate the agreement early?
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What does a standard title insurance policy do?
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Which term describes the transfer of property from the current owner to another party by sale or gift?
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What does the principle of substitution state in the sales comparison approach to property valuation?
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Who can require a buyer to purchase homeowners insurance?
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Study Notes
Broker Compensation
- Average broker compensation ranges from 5-7% of the home's sale price.
Fair Housing Act and Religious Exemptions
- Religious organizations renting residential properties can legally choose tenants based on religion, exempt from Fair Housing Act.
Trade Fixtures
- Tenants are allowed to remove trade fixtures when vacating a leased property.
Loan Qualification and Debt Service
- A borrower with a gross monthly income of $3,000 can have additional long-term obligations up to $280 after a PITI payment of $800, under a 36% total debt service ratio.
Area Calculation
- A square bedroom measuring 10 feet by 10 feet has an area of 100 square feet.
Economic Characteristics of Land
- Situs refers to the location of a property, making it an essential economic characteristic of land.
Fixed-Rate Mortgages
- Total interest in a fully amortized fixed-rate mortgage is predetermined.
Fair Housing Act Exemptions
- Renting a room in an owner-occupied house is exempt from the federal Fair Housing Act.
Americans with Disabilities Act (ADA)
- The ADA applies to both privately owned and government-owned public accommodations.
Eminent Domain
- The government has the right to seize private property through eminent domain, a process called condemnation.
Physical Characteristics of Land
- Land is indestructible, non-homogeneous, and immobile.
Contract Contingencies
- A contingency is a stipulation that must be satisfied for a contract to be executed.
Acceleration Clause
- An acceleration clause allows lenders to demand full repayment of a loan if the borrower is behind on payments.
Metes and Bounds
- A metes and bounds legal description must always return to the point of beginning.
Discriminatory Practices in Real Estate
- Real estate professionals must inform clients that they cannot legally discriminate against protected classes.
Novation
- Novation is the process of replacing one contract with another, transferring obligations.
Capital Gains Tax
- A couple selling a home for $950,000 after purchasing it for $400,000 faces a capital gains tax on the $50,000 profit, after applicable exemptions.
Valid Contract Elements
- A lawful objective is an essential element, ensuring the contract does not involve illegal activities.
Statute of Limitations
- Deanna's inability to sue her agent reflects the statute of limitations, limiting time to file legal claims.
Ad Valorem Taxes
- Pedro's property tax payment for an assessed value of $290,000 at a tax rate of 2.375% totals $6,887.50.
Voidable Contracts
- A voidable contract allows at least one party to rescind the agreement.
Origination Fee
- An origination fee in mortgages is commonly known as points.
Mutual Rescission
- An early termination of an agency agreement by mutual consent is called mutual rescission.
Title Insurance
- A standard title insurance policy protects against defects discovered in the title after closing.
Voluntary Alienation
- The act of transferring property ownership via sale or gift is termed voluntary alienation.
Sales Comparison Approach
- The principle of substitution in property valuation indicates a property's value is equal to what a consumer would pay for a comparable property.
Homeowners Insurance Requirement
- Lenders have the authority to require buyers to obtain homeowners insurance.
Unauthorized Practice of Law
- Certain actions in real estate may constitute the unauthorized practice of law, requiring legal expertise.
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Description
Test your knowledge with this National Real Estate Exam practice test. This quiz covers key concepts such as broker compensation and Fair Housing Act exemptions. Perfect for those preparing for their real estate licensing exams.
