test.docx

A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly grown in popularity, and they were able to sell their home this year for $950,000. How much of that money will they be required to pay capital gains tax on? 50000 550000 300000 950000 A married couple gets a $5...

A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly grown in popularity, and they were able to sell their home this year for $950,000. How much of that money will they be required to pay capital gains tax on? 50000 550000 300000 950000 A married couple gets a $500,000 capital gains tax exemption. $950,000 - $400,000 = $550,000 in gains. $50,000 of that is over the amount of their $500,000 exemption, and will eligible to be taxed. What type of listing provides a commission to the broker ONLY if their activities bring about a sale? open exclusive right-to-sell exclusive agency net An open listing provides a commission to the broker only if their activities bring about a sale. Who provides flood insurance to homeowners? the National Flood Insurance Program (NFIP) various privately owned insurance companies state-owned flood insurance companies the Federal Emergency Management Agency (FEMA) Flood insurance can be purchased only from the National Flood Insurance Program (NFIP). What is novation? the substitution of one contract for another the act of representing a client an example of a cloud on the title the conveyance of a title between two parties Novation is a new contract substituting the obligations of an original contract. When you're talking about mortgages, what is another name for an origination fee? points escrow PITI discount fee The origination fee may also be described as points. The borrower is the party responsible for paying the origination fee. Which federal law amended the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)? Superfund Amendments and Reauthorization Act (SARA) Clean Air Act National Environmental Policy Act (NEPA) Clean Water Act In 1986, six years after CERCLA became law, it was amended by the Superfund Amendments and Reauthorization Act, or SARA. SARA designated more money to the Superfund trust, and established new environmental laws and regulations. Tareq represented the seller in the sale of a house for $427,000. The commission agreed upon was 7% and Tareq gave half to the buyer's representative. What will he take home if the split with his brokerage is 80% Tareq - 20% broker? 11956 23912 5978 2989 Tareq will take home $11,956. Commission = Rate × Sales Price. That total commission will be divided by 2 (half goes to the buyer's side), and then 80% of that amount will go to Tareq. Which of these is an economic characteristic that makes land a distinctive commodity? situs liquidity indestructibility immobility The economic characteristics that make land or real estate a distinctive commodity are fixity, situs, scarcity, and modification. Jordan took out a loan in the amount of $265,000. Her annual interest rate is 4%. What will she pay monthly in interest? 883.33 1060 675.66 933.33 She will pay $883.33 monthly. Annual interest = Interest rate x Principal. Divide annual interest by 12 to get monthly interest. When a property management agreement is signed, it creates: a general agency relationship between the owner and the property manager a special agency relationship between the owner and the property manager a general agency relationship between the sponsored agent and the property manager a special agency relationship between the owner and the sponsored agent When a property management agreement is signed, it creates a general agency relationship between the owner and the property manager. TILA does NOT apply to which of the following kinds of loans? business loans FHA loans consumer loans under $25,000 subprime loans TILA does not apply to business loans. What is attached to an original contract before it is signed? addendum amendment assignment novation Addenda are attached to an original contract before it is signed. An investor has purchased a one-family home that they plan to rent as an investment. Which of these statements accurately describes how it can be depreciated? It can be depreciated over 27.5 years. It can be depreciated over 39 years. It cannot be depreciated because it is residential property. It can be depreciated over 1 year because it is a one-family residence. Residential investment properties are depreciated over 27.5 years. A new $350,000 home is being built in a neighborhood of mostly $200,000 homes. Although the home has many updates and is in better condition than the surrounding houses, its value is significantly less than the price. Which value principle of appraisal explains this? principle of regression principle of progression principle of change principle of digression This is incorrect. The principle of change states that the condition of a property, the desirability of its location, and the market in which it exists can always change. The correct answer is the principle of regression, which states that a subject property situated in the midst of lower-value homes will experience a downward pull on its own value. Which ownership rights can be sold separately from a property's surface rights? subsurface, air, and water rights air rights only water rights only subsurface and water rights only It's important to understand that the four different rights — subsurface, surface, air, and water — may be sold together OR separately. Liability for others by mandate of law or by express agreement is called: vicarious liability implied liability special liability general liability Liability for others by mandate of law or by express agreement is called vicarious liability. An appraisal is required for all: federally related loan programs property purchases loans, no matter their origin properties conveyed after death An appraisal is required for all federally related loan programs. Darleene is looking at an investment property. The annual net operating income (NOI) of the property is $310,000. If the capitalization rate for this class of property in this area is currently 9%, what is the total value of this property? 3444444 3754444 $344,444,44 279000 The value of the property is $3,444,444.44. Net operating income (I) ÷ capitalization rate (R) = value (V). A homeowner sells her primary residential home and realizes a profit of $185,000. How much tax will this homeowner pay on the capital gains? None. Homeowners are exempt from capital gains up to $250,000 per person every two years. None. Homeowners are exempt from taxation on all gains from the sale of their primary residence. She will pay the capital gain tax rate on $15,000 as the exemption limit is $150,000. There is no exemption on income earned; she will pay the capital gains tax on the $185,000. A homeowner will not pay any capital gain taxes on a profit of $185,000. Homeowners are exempt from capital gains up to $250,000 per person every two years. Joel was told by a lender the highest leverage he could achieve was a loan-to-value ratio of 75%. His loan principal is $315,000. What is the total purchase price? 420000 400000 551600 435000 An LTV of 75% means Joel paid a down payment of 25%. Using his down payment and the loan principal, we can calculate the total purchase price of $420,000. Which of these is the best example of stigmatized property? home where a notorious convicted murderer once lived apartment unit that has a visible mold problem townhouse that has a leaking roof house that's been on the market for months because it's priced above market value Property is described as stigmatized when its value may be reduced by things that occurred on the property, such as death, crime, or paranormal activity. These things may be undesirable to buyers, but they do not affect the physical condition of the property. Which federal law amends CERCLA, designates more money to the Superfund trust, and establishes new environmental laws and regulations? Superfund Amendments and Reauthorization Act (SARA) the Brownfield Act the Clean Air Act the National Environmental Policy Act (NEPA) The Superfund Amendments and Reauthorization Act is a federal law that amended CERCLA, designated more money to the Superfund trust, and established new environmental laws and regulations. What is a life estate? an interest in real estate that is limited to the duration of the measuring life the undivided and unlimited ownership of an estate an interest in an estate that is limited by specific conditions a legal doctrine stating a decedent's property will pass to the state without their consent if they die with no will A life estate is an interest in real estate that will end upon the death of the measuring life. Which economic principle states that the value of a property is only what a consumer would pay to acquire a comparable property? principal of substitution principal of contribution principal of supply and demand principal of conformity The principle of substitution states that the value of a property is only what a consumer would pay to acquire a comparable property. What is vicarious liability? liability for others by mandate of law or by express agreement responsibility an agent has for the acts of their client liability for one's own actions as outlined in a contract responsibility of a guilty party to compensate an injured party Liability for others by mandate of law or by express agreement is called vicarious liability. A landowner gives a nonprofit permission to host a series of fundraising concerts on the owner's property every summer. However, the owner is selling the land, and the nonprofit will no longer be guaranteed use of the land. This is an example of a(n): license encroachment negative easement easement by necessity This is an example of a license. A license is a right to use the land of another that can be granted as well as terminated by the property owner. These rights typically do not run with the land or transfer with the transfer of deed or title. The license is temporary and can be withdrawn at any time, upon the sale of the property to someone else, or when one of the parties dies. Property is conveyed to a school “so long as the land is used for only academic and recreational purposes.” The conveyance granted is a(n): fee simple determinable estate fixture encumbrance bundle of rights The conveyance granted is a fee simple determinable, which causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated. Ingrid took out an amortized loan of $300,000 with a 5% interest rate. Her monthly payment is $1,500.37. How much will she pay in interest on her first monthly payment? 1250 1500 300 500 First, you'll find the annual interest, using this formula: Interest rate x Principal = Interest. So, 0.05 x $300,000 = $15,000, which is the annual interest. Divide $15,000 by 12 to get the monthly interest. $15,000 ÷ 12 = $1,250. The monthly interest payment of 5% on a $300,000 principal balance would be $1,250. The provisions of the Americans with Disabilities Act are MOST likely to apply to owners of: grocery stores time-share properties single-family homes apartments The ADA governs commercial and public properties. Therefore, it is most likely to apply to the owners of grocery stores. A broker in an open listing only gets a commission if: the broker's activities bring about the sale the broker or the owner procures the buyer the property is sold within the first half of the agency period the property is sold for a price that is higher than the asking price An open listing provides a commission to the broker only if their activities bring about a sale. A Jewish organization owns a small apartment complex. It wants to rent housing to only Jewish tenants. Under the federal Fair Housing Act, is this legal? Yes. Religious organizations which rent to tenants for residential purposes are exempt from the Fair Housing Act. No. No one is allowed to discriminate based on religious preferences. Yes, but only because this organization's property would be classified as commercial rather than residential real estate. No. While private clubs can discriminate based on their preferences, religious organizations cannot. Yes. Religious organizations which rent to tenants for residential purposes are exempt from the Fair Housing Act. Which of these is an example of redlining? a bank refusing to issue mortgages in a part of town with a majority Latino population a borrower lying on a mortgage application in an attempt to get better loan terms a real estate agent exclusively showing her Asian clients homes in a predominantly Asian neighborhood a broker convincing a Black family to sell their house in their rapidly gentrifying neighborhood A bank refusing to issue mortgages in a part of town with a majority Latino population is an example of redlining, and it's illegal. What are brownfields? properties contaminated by hazardous substances water reclamation areas wetlands that have been paved over authorized landfills for hazardous waste disposal Brownfields are properties contaminated by hazardous substances. What are ad valorem taxes based upon? the value of the property the age of the property the area of the property the condition of the property Ad valorem taxes are based upon the value of the property. Henri's loan will be for $225,000 after putting a 25% down payment towards the home purchase. He'll also be paying a 1-point origination fee and a 1-point discount fee. Based solely on this information, how much cash to closing will Henri need? 79500 77250 75000 73250 Henri's $225,000 loan is based on a $300,000 sales price ($225,000 ÷.75 = $300,000). From that, we can solve for the 25% down payment ($300,000 x.25 = $75,000). Since we know that a point equals 1% of the loan, we can add the 2 points ($4,500) to the down payment ($75,000) to get a total cash to closing amount of $79,500. To qualify for a broker license, an individual must have: 900 classroom hours (60 semester hours) and four years' active experience as a Texas license holder 800 classroom hours (40 semester hours) and four years' active experience as a Texas license holder 700 classroom hours (35 semester hours) and three years' active experience as a Texas license holder 600 classroom hours (30 semester hours) and six years' active experience as a Texas license holder To qualify for a broker license, an individual must have completed 900 classroom hours (60 semester hours) and four years' active experience as a Texas license holder. TREC's Consumer Protection Notice, which is to be displayed prominently in every broker's place of business, serves to: provide Commission contact information for the purpose of directing complaints from the public outline the protections consumers have relative to real estate transactions identify the license status of the designated broker of that business as well as all of their sponsored sales agents disclose all possible agency relationships offered by that particular broker's business TREC's Consumer Protection Notice, which is to be displayed prominently in every broker's place of business, serves to provided the name, mailing address, and telephone number of the Commission for the purpose of directing complaints from the public. With a depreciable basis of $257,800, what is Laura's annual depreciation allowance? 9374.55 6610.26 5543.12 8593.33 Laura's annual depreciation allowance is $9,374.55. Remember, the depreciable basis will apply over a period of 27.5 years. In addition to the broker's own sales agents and cooperating resident brokers, with whom else can a Texas broker split fees or commissions? foreign (out-of-state) cooperating brokers — as long as the transaction is handled by the Texas broker or one of their sponsored license holders foreign (out-of-state) cooperating brokers — under any circumstances as long as the foreign broker has an active license where they reside either party in the transaction — under any circumstances any unlicensed person who engages in acts for which a license is required — as long as the sales agent's sponsoring broker permits it In addition to the broker's own sales agents and cooperating resident brokers, a Texas broker can split fees or commissions with a foreign (out of state) cooperating broker — as long as the transaction is handled by the Texas broker or one of their sponsored license holders. Which method of legal land description utilizes latitude and longitude lines? rectangular survey system lot and block metes and bounds subdivision and plot The rectangular survey system uses latitude and longitude to map land. Scott's broker is going to get a commission no matter who secures a buyer for the property. What kind of listing do Scott and his broker have? exclusive right-to-sell listing exclusive agency listing open listing net listing With an exclusive right-to-sell listing agreement, the broker gets compensation regardless of who sells the property. A new 3,000-square-foot home is being built in a neighborhood of mostly 1,000-square-foot homes. Although the home has many updates and is in better condition than the surrounding houses, its value is significantly less than the price. Which principle of appraisal can explain this? principal of regression principal of progression principal of change principal of conformity The principle of regression states that a subject property situated in the midst of lower-value homes will experience a downward pull on its own value. Which of these best describes revocation of a contract? one party initiates the termination of the agreement for just cause both parties mutually agree to end an agreement the contract becomes impossible to perform due to bankruptcy the contract ceases to exist after performance is completed The term for when the client or broker initiates the termination of the agency agreement is known as revocation. Under CERCLA, a landowner may be liable for cleanup when contamination exists: regardless of whether the contamination is the result of the landowner’s actions or those of others only if the contamination is the result of the landowner’s actions only if the landowner did not take reasonable steps to prevent the contamination on the landowner’s property, but not neighboring property Under CERCLA, a landowner may be liable for cleanup when contamination exists regardless of whether the contamination is the result of the landowner’s actions or those of others. Which of these is the amount a buyer agrees to pay and the seller agrees to accept for a property? market price market value mortgage value cost Market price is the amount a ready, willing, and able buyer agrees to pay (and a seller agrees to accept) for a property. The present value of a property is affected by the expected income or utility that property will give its property owner. This is called the principle of: anticipation appreciation contribution change The principle of anticipation states that the present value of a property is affected by the expected income or utility that property will give its property owner. Which of these can a broker do that a salesperson or associate broker not do? hold a trust fund account withdraw or transfer money from the broker's trust account place a client's funds into their business operating account hold a personal account A broker can hold a trust fund while a salesperson or associate broker cannot. That broker can, however, authorize either of these two types of license holders to withdraw or transfer money from the broker's trust account. Which lease is most commonly used for retail properties? percentage lease net lease gross lease ground lease A percentage lease is most commonly used for retail properties. In Texas, what protection does the state constitutional homestead rights offer? from eviction as result of creditor claims on their owner-occupied primary residence from placement of liens on their owner-occupied primary residence from adverse credit ratings due to loans related to their owner-occupied primary residence from imposition of tax obligations on their owner-occupied primary residence In Texas, a homeowner has automatic state constitutional homestead rights on their owner-occupied primary residence that, with some exceptions, offer protection from claims by creditors being made against their homes, preventing any eviction by these creditors. Which of the following would be a ramification of a license holder failing to inform the buyer, in writing and before closing, that they should have an attorney review the abstract or obtain a title insurance policy? loss of the right to receive payment or recover commission a reduction by half in commission owed nothing since these matters are between the buyer and the title company automatic revocation of license with the potential of criminal charges In order to receive payment or recover any commission, the license holder must have informed the buyer, in writing and before closing, that they should either have an attorney review the abstract or obtain a title insurance policy.