Real Estate Terminology Quiz

Study Notes

Real Estate Basics

PITI stands for Principal, Interest, Taxes, and Insurance.

Agency Relationships

Agent Anna has a home listed for sale and shows the home to the Quinns, whom she does not have a buyer’s agency agreement with; the Quinns are considered customers.
Larry listed his home for sale with an agent, and the property was exposed to an open and free market; this type of sale would be considered an arm’s length transaction.
The duty of obedience requires a licensee to follow the principal's orders and requests as long as they are not unethical or illegal.

Real Estate Definition

Real Estate is defined as land and all items within the improvements.

Disclosures

Melissa, an agent, should suggest that the sellers seek legal counsel when they ask legal questions she feels certain she knows the answers to.
A fence that extends onto the land of another from a neighboring property is called an encumbrance.
Matt, an agent, should have the seller complete a Lead-Based Paint Disclosure due to the age of the home (built in 1965).
A seller's property disclosure is generally not required in a residential foreclosure transaction.

Listing Agreements

A listing agreement in writing creates an express agency.
Part of agent Connie's listing packet includes a form for the seller to complete that covers the components of the home for sale and the seller's knowledge of the condition of such items; this form is referred to as the Seller's Disclosure.

Fair Housing and Landlord-Tenant Laws

The Fair Housing Act aims to promote fair and equal access to housing opportunities for all residents of Michigan, regardless of their background or characteristics.
Michigan law specifies a notice period landlords must adhere to before entering the property for non-emergency reasons.
Lead-based paint can pose serious health risks, especially to young children and pregnant women; Michigan law mandates certain disclosures to ensure tenants are informed about potential hazards in older rental properties.

Contracts and Insurance

Undisclosed Dual Agency is created by representing both parties in a transaction without disclosing the relationship to all parties.
Net Listings, which are illegal in most states, occur when a seller sets a minimum net proceeds amount and the agent may keep any amount over that as commission.
Errors and Omissions Insurance does not cover intentional acts or negligence of a Broker selling property he owns.

Property Valuation

The income approach to property valuation considers the potential rental income and expenses associated with the property.
The cost approach to property valuation involves determining the replacement cost of the property and subtracting depreciation to arrive at an estimate of value.
A title search is conducted to ensure the property has a clear and marketable title, free from any liens or claims that could affect ownership.

Mortgage and Financing

The Debt-to-Income Ratio (DTI) is used to assess a borrower's ability to repay a loan by comparing their monthly debt payments to their gross monthly income.
A down payment is provided by the buyer to demonstrate their serious intent to purchase the property and is typically a percentage of the purchase price.
The adjustment period in adjustable-rate mortgages (ARMs) refers to the frequency at which the interest rate can change, typically specified in terms of years.
Private mortgage insurance (PMI) is used to protect the lender in case the borrower defaults on a loan, especially when the down payment is less than 20%.

Description

Test your knowledge of real estate terminology with questions about payment, interest, taxes, investments, clients, fiduciaries, principals, and property listings. This quiz covers key concepts in the real estate industry.