Real Estate Exam Prep Flashcards

Questions and Answers

An individual who is limited to showing properties, soliciting and listing properties for sale as well as assisting a broker in managing property is known as a/an:

Property manager

Listing referral agent

Salesperson (correct)

If the earnest money deposit is tendered by a buyer directly to the listing broker instead of the selling broker, who assumes escrow duty?

The listing broker shall assume the escrow duty

A salesperson wishes to include his nickname in newspaper ads for his listings. This is permitted if the salesperson included his nickname on his license applications or biennial renewal applications.

True

All of the following would cause a broker's license to be revoked or suspended except:

Refusing to present a verbal offer to purchase one of the broker's listings Signup and view all the answers

In Pennsylvania, any representation agreement that requires a buyer to pay a fee for the services a broker provides must include a standard agreement form in writing.

True Signup and view all the answers

The Smiths purchase a cooperative on the Gold Coast. At closing they will receive shares of stock and a __________ lease.

Proprietary Signup and view all the answers

In some states, the right of a husband to gain ownership of property when his wife dies can be described as:

Curtsy Signup and view all the answers

Land movement due to an earthquake is called?

Avulsion Signup and view all the answers

Which gives a government the right to take private property for public use provided the owner is given just compensation?

Eminent Domain Signup and view all the answers

Developer George sued for the value of the land he purchased after the zoning board refused to rezone it. This type of legal challenge is known as?

Inverse Condemnation Signup and view all the answers

According to USPAP, what is the definition of market value?

The most probable price a property will bring Signup and view all the answers

For the income approach to appraisal, debt service refers to:

Mortgage payments Signup and view all the answers

Which term best describes combining two or more parcels of land into one larger parcel to increase value?

Plottage Signup and view all the answers

Jack buys Don's property, which is subject to a mortgage. After five years of payment, Jack defaults. What is the appropriate remedy for the original mortgagor?

The mortgagor has no recourse as there was no assumption. Signup and view all the answers

What is NOT part of the secondary market?

The Federal Universal Mortgage Association Signup and view all the answers

An owner's interest or value in property, over and above the mortgage debt, is known as?

Equity Signup and view all the answers

What is NOT required of a veteran to obtain a VA-guaranteed loan?

Upfront MIP premium paid at closing Signup and view all the answers

The most common type of FHA-insured mortgage is called Section?

203b Signup and view all the answers

Upon arrival, the listing agent dealing with an elderly lady realizes she would be happy receiving an offer for much less than market value. What duty has the agent breached?

Disclosure Signup and view all the answers

When should the agent have disclosed their representation of the seller to the buyer?

Before she showed the house Signup and view all the answers

What type of agency relationship exists when a broker manages real property for the owner?

General Signup and view all the answers

What should the agent recommend if a prospective buyer with limited knowledge of rural properties comments on the growth of healthy grass in a small patch of the yard?

Well and septic inspection Signup and view all the answers

A defect is considered ____________ or material if the buyer would not discover it in a reasonably thorough inspection of the property.

latent Signup and view all the answers

The transfer of rights under a contract without the release from obligation is known as?

Assignment Signup and view all the answers

The essential elements of a real estate contract include offer, acceptance, valuable consideration, and?

Contractual capacity Signup and view all the answers

The agency of the federal government that administers fair housing law is?

HUD Signup and view all the answers

Homeowners with both a first and second mortgage decide to ask their primary lender to accept a short sale offer on their home. What should the listing agent warn the seller about?

Second mortgage holders' rights Signup and view all the answers

A property sale will close on April 30, 2010; taxes are $1,575 per year and are paid through the last half of 2009. Calculate the seller's share of taxes using a 365-day year.

$517.81 Signup and view all the answers

If a seller has a $94,000 first mortgage and a $25,000 second mortgage and agrees to sell for $155,000 with a $22,500 cash down payment, what is the equity in the home?

$36,000 Signup and view all the answers

Disintermediation refers to?

The movement of money out of a savings account into a higher-yield investment Signup and view all the answers

The ____________ clause (sometimes known as the 'due on sale' clause)

Alienation Signup and view all the answers

A clause used in a mortgage allowing the lender to call for the full payment of the mortgage because the owner transferred ownership of the property to a third party is known as the ________ clause.

Alienation Signup and view all the answers

USPAP =

Probable Signup and view all the answers

What is the problem, if any, regarding Mary's negotiation with the seller?

Mary cannot negotiate directly with the owner Signup and view all the answers

What is assessment value?

a property's determined valuation to calculate the appropriate tax rates Signup and view all the answers

What is the agent's duty if a large vertical crack is noticed in the basement wall?

To disclose the defect to the client or potential buyers. Signup and view all the answers

What is the total acreage for a 1 mile by 1 mile section?

640 acres Signup and view all the answers

The contract that gives one party the right to do something without obligation is called a(n)

option Signup and view all the answers

If a property sold for $350,000 and the conveyance fee is $2.00 per thousand, how much is the transfer tax?

$3,500 Signup and view all the answers

What are the two main categories of licensure?

Salesperson or broker Signup and view all the answers

According to Pennsylvania License Law, when may a salesperson candidate engage in the activities for which a license is required?

After they have been issued a license by the state Signup and view all the answers

What describes the act of a broker depositing a client's earnest money check into his personal account?

Conversion Signup and view all the answers

The real estate license of a salesperson must be:

Maintained in the employing broker's office Signup and view all the answers

What should the agent do if Tommy asks for a lease agreement instead of a purchase agreement?

Prepare the lease and present the lease Signup and view all the answers

How much notice must the Pennsylvania Real Estate Commission give to the broker of record when they inspect a real estate office?

Notice prior to the start of the actual inspection Signup and view all the answers

What should a salesperson do if given a check from a home warranty company after settlement?

Not accept the check, as this is a conflict of interest to her agency representation. Signup and view all the answers

The licenses of all salespersons employed by the broker must be maintained at the main office.

True Signup and view all the answers

According to Pennsylvania License Law, a salesperson candidate may engage in activities once they have been issued a license by the state.

True Signup and view all the answers

What is the requirement for any person proposing to engage in a real estate transaction of a promotional nature first?

Register with the Pennsylvania Real Estate Commission Signup and view all the answers

In which instance is a seller's property disclosure statement not required?

Sale of a single-office commercial property Signup and view all the answers

What should the listing agent do when a seller makes a counteroffer and wants to hold the earnest money?

Present the counteroffer to the buyer or buyer's agent Signup and view all the answers

When negotiating a contract, what should a buyer's agent do?

Negotiate the lowest possible price for the client Signup and view all the answers

What fee is commonly given to individuals who help agents find leads?

Finder's fee Signup and view all the answers

What could the presence of a sewage treatment plant next to a property cause?

Economic obsolescence Signup and view all the answers

How should an appraiser reconcile three different adjusted sale prices?

Use a weighted average, giving the most weight to the most similar property Signup and view all the answers

What is the property basis after 10 years of depreciation for a rental property originally worth $150,000?

$100,000 Signup and view all the answers

What appraisal principle is based on making adjustments for unique features like a fireplace?

Contribution Signup and view all the answers

What financing method does NOT use an income ratio and a debt ratio for qualification?

VA Signup and view all the answers

What is the lender in a mortgage agreement called?

mortgagee Signup and view all the answers

How may the Real Estate Recovery Fund shortfall be compensated?

The Commission may assess each licensee an amount not to exceed $10 at the time of license renewal Signup and view all the answers

If the loan value is 80%, how much would a purchaser be allowed to borrow on an appraised property worth $86,500?

$69,200 Signup and view all the answers

What should a salesperson do if they receive money from a home warranty company for a referral?

Not accept the check due to conflict of interest. Signup and view all the answers

What is the license renewal continuing education requirement for brokers and salespersons?

14 hours biennially Signup and view all the answers

What is an individual called who negotiates an option contract for another and receives a fee?

Broker Signup and view all the answers

An optionor is a person giving an option in an option contract.

True Signup and view all the answers

According to License Law, may an investor sell properties without a real estate license?

Yes. Signup and view all the answers

What lien attaches to a property to prevent the transfer of title when there is a pending lawsuit?

Attachment Signup and view all the answers

What is the publicly recorded notice of a lawsuit?

Lis pendens Signup and view all the answers

Study Notes

Negotiation and Agency

Mary cannot negotiate directly with the property owner as she must go through the listing agent to avoid bypassing the listing broker.
The seller must approve the actions regarding offer negotiations.

Property Assessment and Taxes

Assessment value refers to the valuation of a property used to determine tax rates.
Properties sold at $350,000 with a conveyance fee of $2.00 per thousand incur a transfer tax based on this formula.

Licensing and Continuing Education

The two primary categories of real estate licensure are salesperson or broker.
Salesperson candidates must wait until their license has been issued by the state to engage in licensed activities.
Continuing education requirement for license renewal is 14 hours biennially.

Ethical and Legal Responsibilities

Salespersons should retain ethical practices and avoid conflicts of interest in transactions, such as not accepting rewards for referrals without proper disclosure.
A broker cannot withdraw funds from an escrow account to cover personal costs, as this would be a violation.

Property and Real Estate Transactions

A home’s value affected by external factors, such as proximity to a sewage treatment plant, is an example of economic obsolescence.
The seller's property disclosure statement is not required for the sale of a single-office commercial property.

Financial Transactions and Calculations

A property can be appraised differently; an appraiser may adjust sale prices using weighted averages.
A real property transfer fee of 1 mill on a sale priced at $63,500 would total $63.50 in taxes.
Selling a house requires considering mortgage payoff, closing costs, and broker commissions to ascertain the minimum acceptable offer.

Closing and Settlement Procedures

At settlement, any prepaid expenses such as homeowner's insurance need to be prorated fairly between the buyer and seller.
Earnest money must be submitted to the appropriate broker as per agreement terms.

Fair Housing and Discrimination

Under the Federal Fair Housing Act, intoxicated individuals do not qualify as disabled.
The term "REALTIST" refers to members of the National Association of Real Estate Brokers.

Property Management and Agreements

An option contract allows one party rights without obligations, and the party granting this is known as the optionor.
A salesperson operates under a broker and assists in showing properties and managing listings.

Legal Notices and Proceedings

A lis pendens is a formal notice regarding pending lawsuits that may affect property titles.

License Law and Compliance

Investors may sell properties they own without a real estate license, exempting them from certain regulations.
Salespersons may use nicknames in advertising if they are included in their licensed applications.### Proprietary Lease
Shares of stock and a proprietary lease are received at closing.

Curtesy and Dower

Curtesy describes the husband’s right to property ownership upon the wife’s death.
Dower refers to the wife’s interest in property.

Avulsion

Describes land movement caused by sudden events, such as earthquakes.

Eminent Domain

Government's right to take private property for public use, compensating the owner justly.

Inverse Condemnation

A legal challenge where a property owner seeks compensation for government actions restricting land use.

Market Value

Defined by USPAP as the most probable price a property can bring in the market.

Debt Service

Refers specifically to mortgage payments in the context of income approach to appraisal.

Plottage

The process of combining multiple parcels of land to enhance value.

Mortgagor Liability

In a situation of property sale subject to a mortgage without assumption, the original mortgagor holds liability for the loan.

Federal Universal Mortgage Association

Not a legitimate entity within the secondary mortgage market; the FHA and Freddie Mac are recognized entities.

Equity

Represents the owner's interest in property beyond the mortgage debt.

VA-Guaranteed Loan

No requirement for an upfront MIP premium to obtain a VA-guaranteed loan; applicable only to FHA loans.

FHA Mortgage Type

The most common type of FHA-insured mortgage is identified as Section 203(b).

Agent Duty Breach

An agent breached the duty of disclosure by not informing a seller about the cash offer below market value.

Disclosure Timing

Agents must disclose their representational status before showing a property.

General Agency Relationship

Exists when a broker manages real property on behalf of an owner, allowing a range of authorized actions.

Well and Septic Inspection

Recommended for rural properties, particularly if unusual lawn growth is observed, indicating potential septic issues.

Latent Defect

Refers to defects not discoverable through reasonable inspection; contrasted with patent defects, which are obvious.

Assignment

The transfer of contract rights without releasing the original obligations, differing from a novation which includes release.

Real Estate Contract Elements

Essential elements of a real estate contract: offer, acceptance, valuable consideration, and contractual capacity.

Fair Housing Law Administration

The HUD (U.S. Department of Housing and Urban Development) administers fair housing regulations.

Short Sale Implications

Listing agents must inform sellers about the rights of second mortgage holders during short sale negotiations.

Tax Calculation on Property Sale

To determine seller's share of taxes due to closing, calculate based on the number of days until the closing date.

Home Equity Calculation

In a property selling scenario, equity is the difference between the sale price and existing mortgage debts.

Disintermediation

Defined as the flow of money from savings accounts to higher-yield investment opportunities.

Alienation Clause

Also known as the "due on sale" clause, allows lenders to demand full mortgage payment upon property transfer to a third party.

USPAP Definition

Acknowledges probable value standards in real estate valuation guidelines.

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Prepare for your real estate exam with these flashcards that cover key scenarios and ethical dilemmas. Each card presents a situation that tests your understanding and application of real estate principles. Ideal for anyone looking to strengthen their knowledge before the exam.