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A comprehensive set of questions and answers covering key concepts in real estate principles and practices. it's ideal for students preparing for a final exam, offering a valuable review of topics such as mortgages, deeds, property taxes, and agency relationships. The questions test understanding of legal aspects, financial calculations, and practical applications within the real estate field. This resource is particularly useful for students seeking to solidify their knowledge before an assessment.
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"A buyer has just made the final payment on his mortgage loan to his bank. The buyer will regain
"A builder built a structure with six stories. Several years later, an ordinance was passed in that area banning any building higher than four stories. The building should be allowed to continue in
"In funding a loan that is secured by a residence, the lender is required to disclose all costs
"Which of the following contains no warranties at all and may convey no title at all, depending on
Quitclaim deed (The quitclaim deed (nonwarranty deed) provides the grantee with the least protection of any deed. It carries no covenant or warranties and conveys only such interest, if any, that the grantor may have when the deed is delivered.)"
include planning, zoning, subdivision regulations, building codes, and environmental protection legislation. Police power does not include deed restrictions."
new parties to an existing obligation."
consumers who have indicated their preference to limit the telemarketing calls they receive."
freehold estates that can be transferred include: fee simple estate (can pass by inheritance);
defeasible fee estate (can pass by inheritance); pur autre vie estate (can pass by inheritance), and ordinary conventional life estate with remainder or reversion (does not pass by inheritance)." "Which of the following items are NOT usually prorated between the seller and buyer at closing?
worth of future benefits." "A seller wants to net $72,000 on the sale of his home. He has agreed to pay a brokerage commission of 6%. What is the minimum sales price that will ensure that the seller will net his
"A borrower defaulted on his mortgage loan payments, and the lender foreclosed. At the foreclosure sale, the property sold for $64,000; the unpaid loan balance at the time of foreclosure
"A buyer is financing her new house with a fixed rate mortgage for $394,000 for 30 years at a 6% interest rate. Her monthly principal and interest payment will be $2,364. If the buyer takes all 30 years to pay off this loan, what will be the total interest paid over the life of her loan? (Use a 30-
"A borrower has been approved for a 6.5% fixed rate 30-year mortgage loan for $138,000. He will be closing on September 27. What will be the interim interest entry on the settlement statement?
"Which law does NOT specifically pertain to residential property management and related tasks?
- CORRECT ANSWER Real Estate Settlement Procedures Act" "Someone seeking to be excused from the dictates of a zoning ordinance because of hardship
deviation from an ordinance due to unique circumstances. To get a variance, the property owner must prove that there is no other reasonable use for the property and the property owner will suffer a substantial hardship if the variance is not granted. The hardship also must not have been created by the property owner."
to remain current." "The assessed value of a parcel of land is $64,000 and the local ad valorem tax rate is $.72 per $100. Which of the following is the correct tax proration in accordance with customary practice if the
credited $151.04."
relationship be put in writing before presenting an offer."
broker must be deposited in a trust or escrow account in an insured bank or savings and loan in North Carolina and remain there for 3 days or upon cancellation by the purchaser, whichever occurs first."
Carolina Department of Transportation, does not mean that the Department of Transportation has assumed responsibility for maintenance of the streets." "In North Carolina, a trustee is the conditional holder of title to mortgaged real estate. North
There are two different legal theories about the effect of mortgaging property—the title theory and the lien theory. Under the lien theory, which is the older, more traditional approach, a two- party mortgage instrument is used as security for the debt. The borrower (mortgagor) retains both legal and equitable title to the property. North Carolina follows the title theory."
honesty"
Dividing the price by the annual gross income" "A homeowner sells his home to a buyer and agrees to finance $15,000.00 of the purchase price on
"The vendor/owner retains naked legal title at the time of sale but gives possession to
"A lessor believes the desirability and sales volume of a large retail store will increase dramatically in the next few years. In negotiating a long-term lease for the premises, the lessor
"As part of a purchase agreement, the seller agreed to complete a roof repair, prior to closing. The seller has now changed his or her mind and refuses to complete the repair. What rights does the
"A broker offers a listing agreement giving the broker's office sole permission to sell the property for a period of 120 days. The sellers want to reserve the right to sell the property themselves without paying a commission. In this situation, the listing agreement that will BEST protect both
Prescription" "A seller revealed the property has no termites, but upon an inspection of the premises, the buyer learned there were termites. The buyer chose to go through with the contract and close. This is an
"Persons or groups specifically exempted from discriminatory practices by the Civil Rights Act of
the members of its religion" "An appraiser used 80% of the value arrived at by the market comparison approach, 20% of the value arrived at with the cost approach, and 0% of the value by the income approach. This
Diminishing returns" "Associate Jones has Kathy under contract to purchase Lonnie's property. Jones will receive
Fences and sidewalks"
"How much is Mr. Xi willing to pay for the property? The property produces an annual gross income of $52,000 and net operating costs are $6,000. The capitalization rate for comparable properties in the area is 8%. Interest on his loan will be 5%.
In order to determine the value of a single property, you must determine the NOI and then divide the NOI by the CAP Rate. $46,000/.08 = (Value) $575,000" "A third party that administers a trust on behalf of the beneficiary and carries out the wishes of
mortgages in the secondary mortgage market" "A homeowner sells his home to a buyer and agrees to finance $15,000.00 of the purchase price on
authority granted or implied"
"In order to qualify for a tax-deferred exchange, a seller must complete the acquisition of another
days" "If a husband and wife want a property they own together to automatically belong to the other
tenants"
Income of $80,000 and a sales price of $640,000 = 8 GRM"
"The clause that changes the priority of a loan, making it secondary to a later recorded loan is
"At the moment the seller and the buyer enter into a sales contract, a buyer's interest in the real
"The arrangement between an owner of commercial property and a broker who agrees to procure
"Total rents declined $1,000 per month as a result of the city banning on-street parking in front and along side a small office building. Assuming a capitalization rate of 8%, the building suffered
$1,000 x 12 = $12,000 (annual rent) divided by 8% = $150,000"
"Exemptions to the Foreign Investment in Real Property Tax Act (FIRPTA) withholding would be
- CORRECT ANSWER Personal residences under $300,000"
Exclusive Right-to-Sell Listing Contract" "The intent of the parties, method of attachment, adaptation, and agreement are all legal tests for
with the property" "Starting at the northwest corner of Section 1, proceed in a southeasterly direction to the northeast corner of Section 12. From there, proceed west two miles to the southeast corner of Section 3. Proceed from there in a northeasterly direction to the point of beginning. What is the
The described parcel bisects Section 1 (320 acres) and Section 2. The 2 half sections (320 + 320) = one full section"
"After closing and taking possession of a home, the buyer found that the seller had removed the
Buy/Sell Contract to determine his or her rights" "A buyer closes on a new home purchased from the builder, and within 3 months of living there,
"A business organizational form in which general partner(s) are liable for all debts and actions is
“A property owner is selling a rectangular lot that has 150' of road frontage and is 375' deep. If the
"Under the concept of riparian rights, North Carolina owners of property adjacent to navigable
own the land to the edge of the water." "The Lead-Based Paint Hazard Reduction Act requires that in residential transactions subject to
informational pamphlet and a disclosure statement about the presence of lead in the property." "An appraiser is using the cost approach to value. After determining the replacement cost of the
the land value that was determined by the sales comparison approach."
"An offer to purchase real estate is a binding contract after it has been signed, communicated, and
loaning to provide all information to clients" "Which of the following statements is TRUE about the sale of property that has been the owner's
is determined from contrasting the realized amount from the sale of the real property to that property's cost basis"
conveyance. {A valid deed must contain certain essential elements, including the following: deed must be in writing; grantor must have the legal capacity to execute a deed; grantee named with reasonable certainty must be identified; there must be adequate words of conveyance; there must be an accurate legal description of the property conveyed; deed must be signed by the grantors; deed must be delivered to and voluntarily accepted by the grantee. Deeds do not have to be sealed in North Carolina to be valid.)" "In North Carolina, the last day that real estate taxes for the current year may be paid without
"A real estate loan indicates that if the title transfers to the property, the lender must be paid in
"Which of the following loan terms will be considered a trigger term under the Truth in Lending
rate"
deeds from the party or parties with possible interests in the property." "A broker receives an earnest money deposit with a written offer that indicates that the buyer will leave the offer open for the seller's acceptance for 10 days. On the fifth day, and prior to acceptance by the seller, the buyer notifies the broker that he is withdrawing his offer and
time before contract acceptance."
the brokerage activities of licensees." "A woman grants a life estate to her grandson and stipulates that on the grandson's death, the
in remainder interest." "A subject property is an 1,800-square-foot house with 3 bedrooms, 1½ baths, a 2-car garage and a deck that is listed for $163,500. A great comparable for the subject property sold for $166,200 and has 1,850 square feet, 3 bedrooms, 2 baths, a 1-car garage and a deck. The comparable property closed 2 months ago, and appreciation in the area has averaged 6% per year. Estimate a market value for the subject property, using the following market values: full bathroom = $2,000; 2-car
"Which of the following statements is TRUE about the North Carolina Real Estate Commission's
the brochure in all sales transactions, including commercial sales."
courses."
NCREC rules regarding advertising and marketing."
"A property is being appraised for loan purposes. The property is an elegant old mansion that has been converted into three apartments. Which approach to value is the appraiser most likely to
"A purchaser buys a home for $143,900 and assumes the seller's loan balance of $109,700. How
"The North Carolina law that provides that a contract to sell land is not protected against a third
provides that many types of real estate documents are not valid as to third parties unless they are recorded. The documents covered include deeds, mortgages, installment land contracts, assignments, options, leases of more than three years, easements, and restrictive covenants." "The commission rate is 7¾% on a sale of $50,000. What is the dollar amount of the commission?
- CORRECT ANSWER $3,875" "A man sold his house for $105,000. He owned the house for five years and made a profit of 25%
"A seller wants to net $65,000 from the sale of her house after paying the broker's 6% fee based on
automatic renewal clause." "A woman purchased a condominium unit and obtained financing from a local savings
"Which of the following statements is TRUE about the North Carolina Residential Property
formation, if they do not receive the information required by the Act." "A broker enters into a listing agreement with a seller wherein the seller will receive $120, from the sale of a vacant lot and the broker will receive any sales proceeds exceeding that amount
listing calls for a net fee, the agreement is referred to as called a net listing. A net listing provision refers to the amount of money the seller will receive if the property is sold. The seller's property is listed for this net amount, and the broker is free to offer the property for sale at any price higher than the listing price. Although not illegal in North Carolina, this type of listing is not recommended because of an obvious conflict of interest." "If a person is being compensated, which of the following activities does NOT require an active
owned real estate" "The buyers enter into a purchase contract with the sellers to buy the sellers' house for $84,500. The buyers deposit $2,000 as earnest money and obtain a new mortgage loan for $67,600. The purchase contract provides for a March 15 settlement. The buyers and sellers prorate the year's estimated real estate taxes (using the 360-day method) of $880.96. The taxes are unpaid and will be paid later in the year by the buyers. The buyers have additional closing costs of $1,250, and the sellers have other closing costs of $850. How much cash must the buyers bring to the settlement?
explanation-$84,500 purchase price less $67,600 loan, less $2,000 deposit, less $183.53 prorated taxes, plus $1,250 closing costs = $15,966.47 rounded to $15,966; proration of taxes: $880.96 ÷ 360 days = $2.447 per day × 75 days (Jan 1-Mar 15) = $183.25 credit buyer/debit seller"
promise to repay the debt" "When a property goes into foreclosure and then the owner executes a lease, _______ when the
"A woman resided in her personal residence for 7 years. She married last month and deeded a one-half (1/2) interest in her home to her husband. She moved to his house and listed her home
"Oral or verbal evidence may not be used to change a contract that has been put in writing due to
"A husband and wife buy a home but fail to specify what form of legal ownership they preferred.
common"
"A purchaser is paying $350,000 for a property with a loan of $150,000. What is the down
If you know the total and the part and want to find the percentage, divide the part by the total. The downpayment is $350,000 - $150,000 (loan amount), which is $200,000. $200,000 divided by $350,000 is 57.14%."
"A method used to control density and overcrowding by restricting setbacks, building height, or
Descent" "A broker offers buyers one-stop shopping by providing title insurance, home inspection,
controlled business arrangement" "'M's purchase offer affords the seller three days to accept. One day after making the offer, and before acceptance, 'M' wants to withdraw the offer. 'M's buyer agent should inform 'M' that the
"A residential lease provided that the landlord would supply water. The water to the building was cut off because the landlord had not paid the water bill. The tenant can leave the premises with no
42' X 36' = 1,512 square feet X $108.00 = $163,296.00; then 1,512 sq. ft. X $4.00 = $6,048.00, which is subtracted from $163,296. = $157,248; plus land = $185,148.00"
"Broker A is preparing a closing statement on a house that sold for $150,000. Broker A holds the buyer's $5,000 earnest money deposit. The Buyer will put a $30,000 down payment. The remaining purchase price will be financed by a new mortgage on which the buyer will pay a 2 point loan origination fee. The buyer will pay $1,600.00 in miscellaneous closing expenses. Current year real estate taxes are $1,500, to which Buyer will receive a credit from seller for the
Buyer Debits = $150k purchase price, $1,600 misc closing costs and $2,400 loan origination totaling $154,000. Buyer Credits = $5,000 earnest, Loan of $120,000 and $750 proration of this years taxes not yet due (but payable at the end of the year) for a total of $125,750. $154,000 minus $125,750 equals $28,250 Buyer must bring to closing."