PSI NJ Real Estate Exam Practice Test

Questions and Answers

What is the value limit for an appraiser to handle federally related work on residential property?

$250,000

Which of the following categories of adjustment is NOT essential when preparing a market data estimate of value?

The date of sale of the comparables

The original cost of the building (correct)

The location of the property

The amount of square footage

Which of the following is NOT a method to calculate the reproduction or replacement cost of a building?

Straight-line method (correct)

Unit-in-place method

Square foot method

Quantity survey method

In which location is a parking lot likely to bring the highest sales price?

Business district zoned for a six-story office building Signup and view all the answers

What principle of value is demonstrated when parcels A, B, and C are assembled under one owner?

Plottage Signup and view all the answers

What should a salesperson suggest when asked for a listing price recommendation?

A competitive market analysis Signup and view all the answers

The FHA functions most like what type of entity?

An insurance company Signup and view all the answers

What is a loan that requires the borrower to pay interest only until the maturity date called?

Term loan Signup and view all the answers

Which of the following statements about discount points is FALSE?

They are computed as a percentage of the selling price Signup and view all the answers

When is flood insurance REQUIRED to obtain a loan?

When the property is located in a flood hazard zone Signup and view all the answers

Usury laws were enacted to protect whom?

Borrower Signup and view all the answers

What term describes a buyer who makes an offer on a property and allows the seller to retain title until the principal is paid off?

Vendee Signup and view all the answers

The Equal Credit Opportunity Act addresses all of the following EXCEPT?

Standardization of interest rates Signup and view all the answers

What kind of listing contract allows the owners to sell their house themselves without paying a commission?

Exclusive agency listing Signup and view all the answers

What regulation might a real estate licensee violate by accepting an undisclosed fee for referrals?

RESPA Signup and view all the answers

Which event would AUTOMATICALLY cancel a listing agreement?

Property owner's death Signup and view all the answers

Another term for the owner of a property listed with your firm is what?

Client Signup and view all the answers

When does a broker earn their commission in most listing contracts?

When the seller accepts the offer Signup and view all the answers

What should a broker inform a caller if their listing expired and was relisted with another broker?

He is no longer the listing agent Signup and view all the answers

What type of agency is demonstrated when a principal authorizes an agent to perform a specific act?

Special agency Signup and view all the answers

What do the terms 'littoral,' 'riparian,' and 'appropriative' refer to?

Types of Water Rights Signup and view all the answers

What is a salesperson who lists a property with a contract allowing subagency and dual agency classified as?

an agent to the broker and a subagent to the principal. Signup and view all the answers

Depreciation is calculated based on what?

Cost of the building only. Signup and view all the answers

Who holds the title when a property owner uses his home as collateral for a loan?

mortgagor. Signup and view all the answers

What is a competitive market analysis MOST often used for?

setting a listing price. Signup and view all the answers

What should a listing agent do if a seller informs them about past termite treatment?

tell the seller not to disclose, because the statute of limitations has run out. Signup and view all the answers

Which of the following is NOT a method to calculate reproduction or replacement cost of a building?

Straight-Line Method Signup and view all the answers

What is the adjustment made at closing when a buyer assumes a mortgage of $110,000?

Credit buyer $110,000; debit seller $110,000. Signup and view all the answers

What is the penalty if conditions of purchase in a deed are violated?

Return of the property to the original owner. Signup and view all the answers

What is the purpose of requiring an earnest money deposit in a real estate sales contract?

to provide evidence of the buyer's intention to carry out the contract. Signup and view all the answers

What notice is provided to subsequent purchasers once a judgment is recorded?

constructive notice. Signup and view all the answers

What type of map is MOST useful for describing the terrain of a very hilly lot?

contour map. Signup and view all the answers

What do some Federal agencies require regarding lead paint disclosure?

Require the buyer to acknowledge disclosure of the presence of any known lead paint. Signup and view all the answers

What should a listing agent communicate to potential buyers if the seller mentions neighbor disturbances?

tell potential buyers about the parties. Signup and view all the answers

What is a major reason for buying a condominium over a detached single-family home?

a condominium tends to be more affordable. Signup and view all the answers

If a seller includes kitchen appliances in a sales contract and takes them, what can the buyer do?

The buyer may sue the seller for specific performance. Signup and view all the answers

What is a loan requiring interest-only payments until maturity called?

straight (term) loan (AKA term loan). Signup and view all the answers

What was the reason for the termination of the real estate contract for an unlicensed whiskey sales operation?

Impossibility of performance. Signup and view all the answers

When an agency allows subagency and dual agency, what is a salesperson classified as?

a subagent of the seller. Signup and view all the answers

What term describes the relationship where the agent is in a position of trust to the principal?

fiduciary. Signup and view all the answers

What is an agreement to purchase that has NOT yet closed called?

an executory contract. Signup and view all the answers

What is the primary focus of a broker compiling a competitive market analysis?

look for comparable properties that were located near the property being listed. Signup and view all the answers

What is the power of the government to regulate for public welfare called?

police power. Signup and view all the answers

If a borrower can afford $1,000 monthly payments for a mortgage at 8.5% for 30 years, how large a loan can they afford?

$130,000. Signup and view all the answers

What is the purpose of an Environmental Impact Statement (EIS)?

projects the impact on the environment of a proposed project. Signup and view all the answers

In an exclusive right-to-sell listing, how many brokers can an owner list the property with?

One. Signup and view all the answers

What can an owner do if they receive a better offer while a counteroffer is pending?

the owner withdraws the counteroffer before it is accepted. Signup and view all the answers

Antitrust laws prohibit competing brokers from which of the following?

Receiving compensation from both buyer and seller Signup and view all the answers

What can a buyer seek if misrepresentation occurs regarding property taxes?

rescind the contract. Signup and view all the answers

How much will it cost to retile a kitchen if the sellers give an allowance of $16.95 per square yard for a 10ft x 14ft kitchen?

$264. Signup and view all the answers

According to the law of supply and demand, which of three identical homes would sell for the lowest price?

the first sold. Signup and view all the answers

What should be done first when mold problems are found?

Identify and remedy the cause of the problems. Signup and view all the answers

What does an acceleration clause in a mortgage permit the lender to do if the borrower defaults?

demand immediate payment of the entire note. Signup and view all the answers

If a buyer is getting a fully amortized loan for $220,000, what is the difference between the payments for 15 years at 5.5% and 30 years at 6.5%?

$409.20. Signup and view all the answers

Who would most likely prefer a property manager emphasizing maintenance of value over profitability?

An individual entrepreneur who owns several apartment buildings. Signup and view all the answers

What is a written agreement in which a purchaser agrees to buy and a seller agrees to sell called?

a contract. Signup and view all the answers

What does Errors and Omissions insurance cover for a broker?

Unintentional misrepresentation. Signup and view all the answers

What is an example of a contract terminated due to inability to perform?

when the seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. Signup and view all the answers

What disclosures must appear if 'trigger terms' are used in an advertisement?

Amount of down payment required Signup and view all the answers

Who do deed restrictions apply to?

present and future owners. Signup and view all the answers

In most states, how is foreclosed property sold?

Public Auction. Signup and view all the answers

What type of leasehold does a tenant have after a 15-month lease and one month's rent payment?

tenancy at will. Signup and view all the answers

What adjustment category is NOT essential when compiling a market data estimate of value?

The original cost of the building. Signup and view all the answers

Which Federal law regulates advertisements of a lender's credit terms?

Regulation Z Signup and view all the answers

What principle explains the expected increase in value for a residential property in an area becoming commercial?

anticipation. Signup and view all the answers

What type of contract obliges sellers to convey title if buyers meet certain conditions?

an option contract. Signup and view all the answers

What type of agency is formed when a principal authorizes an agent to perform a specific act?

Special Agency. Signup and view all the answers

What is the advantage of a Federal court hearing for a party alleging violation of Federal Fair Housing laws?

There is no dollar limit on damages paid. Signup and view all the answers

Who is a managing broker responsible for?

all real estate activities of salespersons. Signup and view all the answers

What can a trustee do when land is conveyed to them?

do whatever is permitted under the trust agreement. Signup and view all the answers

What will be the seller's credit for property taxes if they paid $960 for the entire year and the closing is on March 1?

$800. Signup and view all the answers

If an owner lists her home at a 7% commission rate and wants to net $45,000 after fees, what should the selling price be?

None of the above Signup and view all the answers

What did the Jones vs. Mayer decision of 1968 achieve?

removed all exceptions to racial discrimination in housing. Signup and view all the answers

What describes a broker who finances a project with exclusive selling rights?

Agency coupled with an interest. Signup and view all the answers

What does a broker's claim about the property having 'the world's purest well water' exemplify?

an expression of opinion, or puffing. Signup and view all the answers

What should a broker do if a key is requested for a property that is no longer listed under their agency?

inform the caller that he is no longer the listing agent. Signup and view all the answers

What is the adjustment made at closing if the buyer assumes a mortgage with a $600 monthly interest charge?

Debit the seller $300, Credit the buyer $300. Signup and view all the answers

Is racial discrimination in rental of rooms or apartments permitted?

Under no circumstances. Signup and view all the answers

What are crops that require annual planting considered at the time of harvest?

Personal Property. Signup and view all the answers

Who retains fee ownership under a land contract for deed?

Vendor. Signup and view all the answers

Which statement about discount points is FALSE?

They are computed as a percentage of the selling price. Signup and view all the answers

What is the PRIMARY purpose of zoning ordinances?

implement a local master plan. Signup and view all the answers

What can a creditor do to collect against a debtor who will not pay after having obtained a judgment?

Writ of execution. Signup and view all the answers

What are the economic characteristics of land?

Scarcity, location, and durability. Signup and view all the answers

How can an easement be terminated?

Merger of titles. Signup and view all the answers

What event would AUTOMATICALLY cancel a listing agreement?

Property owner's death. Signup and view all the answers

If prospective buyers signed a counteroffer while also finding another acceptable property, what is the status of the contracts?

Both contracts are valid. Signup and view all the answers

What kind of leasehold does a tenant have if they signed a lease and then paid rent after it expired?

tenancy at will. Signup and view all the answers

What is the method a creditor uses to obtain satisfaction against a debtor who will not pay?

writ of execution. Signup and view all the answers

What type of ownership form is MOST often used in timeshare ownership programs?

tenancy in common. Signup and view all the answers

How can real property be converted to personal property?

severance. Signup and view all the answers

What characteristic MOST likely explains the $20,000 price difference between two identical lots?

situs. Signup and view all the answers

What legal description should be used in MOST transaction documents?

the same one used in prior transfers of the parcel, verified by a surveyor. Signup and view all the answers

What would a landowner use to obtain permission for a grocery store in a residential area?

conditional use permit or zoning variance. Signup and view all the answers

What factors does an environmental impact statement typically describe?

public health and safety. Signup and view all the answers

Who will likely pay for new sidewalks installed only on one street?

a special assessment. Signup and view all the answers

Who can bring a lawsuit for inverse condemnation?

the homeowner. Signup and view all the answers

Which doctrine is likely followed by states where water is scarce?

doctrine of prior appropriation. Signup and view all the answers

What should be done when multiple approaches indicate different property values?

the final estimate should be determined through careful analysis. Signup and view all the answers

Study Notes

Water Rights

Terms associated: littoral, riparian, appropriative.
These rights govern water use depending on the property's proximity to water bodies.

Agency Relationships

Salesperson acting as an agent to the broker while being a subagent to the principal under specific listing contracts.
Dual agency allows for both sides of a transaction to be represented by the same agent.

Property Valuation and Sale

Depreciation is calculated based solely on the building's cost.
Competitive market analysis assists in setting appropriate listing prices.
Earnest money deposits show a buyer's commitment to a contract.

Legal and Tax Implications

Properties can incur liens through mortgage agreements, with title held by the mortgagor.
A judgment secures constructive notice for subsequent buyers.
Property owners must disclose known issues within legal limits.

Financing and Mortgage Situations

Assumption of an existing mortgage creates a financial adjustment at closing (debits and credits for buyer and seller).
Various loan types exist, including straight (term) loans that require principal payment at maturity.

Property Management and Condominiums

Property management balances maintenance of value with income generation.
Condominiums are often more affordable than single-family homes.

Contracts and Agreements

Executory contracts indicate ongoing obligations that have not been completed.
Specific performance allows a buyer to enforce terms when a seller fails to comply with agreed conditions.

Environmental and Zoning Considerations

Environmental Impact Statements (EIS) assess the potential consequences of proposed projects on the ecosystem.
Zoning laws primarily implement local master plans and guide land use decisions.

Ownership and Transfer of Property

Tenancy at will allows continued occupancy after lease expiration; all rental agreements must include legal descriptions.
Deed restrictions apply to all present and future owners, impacting property use.

Legal Proceedings and Fair Housing

Lawsuits related to federal fair housing violations can yield unlimited damages.
The Jones vs. Mayer case reaffirmed civil rights protections against racial discrimination.

Sales and Marketing

Market data estimates are informed by adjustments based on factors like location and square footage.
The FHA operates similarly to an insurance company in the mortgage realm.

Economic Conditions and Land Characteristics

Economic characteristics of land include scarcity, location, and durability, influencing property value.
Legal methods exist to terminate easements, such as merging titles.

Property Assessments and Sales

Special assessments fund specific improvements like sidewalks, while public auctions typically facilitate property foreclosure sales.
Distinct process mechanics dictate property listing and sale dynamics within the real estate market.

Contractual Obligations and Adjustments

Understanding contract validity amidst changing buyer interests is crucial.
Mortgage adjustments during closing ensure fair distribution of financial responsibilities related to property ownership changes.

Additional Key Facts

Discount points manage loan interest rates and costs, commonly understood by both buyers and sellers.
Anticipation principle suggests increasing property values in a transitional neighborhood towards commercial use.### Payment of Commissions
Commissions for real estate agents can be paid by either the buyer or the seller.
Calculated as a percentage of the selling price of a property.

Flood Insurance Requirement

Flood insurance is required when a property is located in a flood hazard zone to secure a loan.

Usury Laws

Usury laws are designed to protect borrowers from excessive interest rates on loans.

Vendee in Real Estate

When a buyer makes an offer on a property and pays a portion upfront while allowing the seller to retain title until the principal is paid off, the buyer is referred to as a vendee.

Equal Credit Opportunity Act

This act addresses discrimination in lending and requires written statements for credit denial but does not standardize interest rates.

Listing Contracts

An exclusive agency listing allows property owners to sell their house themselves without paying a commission, but a commission is due if the agent sells it.

Violation of RESPA

Accepting an undisclosed fee for referring a buyer to a specific title company may result in a violation of the Real Estate Settlement Procedures Act (RESPA).

Listing Agreements Termination

A listing agreement is automatically canceled upon the death of the property owner.

Client Definition

The owner of a property listed with a real estate firm is referred to as the client.

Broker Commission Earned

A broker typically earns their commission when the seller accepts the buyer's offer in most listing contracts.

Listing Agent Status

After a listing expires, if the property is listed with another broker, the original broker should inform inquiries that they are no longer the listing agent.

Special Agency Definition

When a principal grants an agent the authority to perform a specific act or transaction, it is termed special agency.

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Description

Prepare for the PSI NJ Real Estate Exam with this comprehensive practice test featuring flashcards on key terminology and concepts. Boost your understanding of water rights, agency relationships, and depreciation to excel in your exam. Ideal for real estate professionals seeking to enhance their knowledge.