Oregon Real Estate Practice Exam Already Passed

Oregon Real Estate Practice Exam Already Passed An exception to title insurance coverage is ✔✔defects that clearly appear in the title search. A licensee has an agency representation agreement with a buyer. When showi ...

Oregon Real Estate Practice Exam Already Passed An exception to title insurance coverage is ✔✔defects that clearly appear in the title search. A licensee has an agency representation agreement with a buyer. When showing another company's listing, what obligation does the licensee have to the seller and the listing broker at the other company? ✔✔Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer. A broker is teaching newly hired salespersons the correct way to complete a listing agreement form. The broker is attempting to show the value of putting the correct property address on the listing. The BEST visual aid to help them learn how to do so accurately would be ✔✔a subdivision plat A formal appraisal will ALWAYS be REQUIRED when the ✔✔lender wants to sell the mortgage to the secondary market. Which of the following would generally be included in the Phase I assessment of a parcel where hazardous substances may have been disposed? ✔✔an on-site visual inspection Even if a loan applicant's current income seems adequate to qualify for a certain loan, the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the applicant's main source of income is ✔✔commission sales A gross lease can be best defined as one where the tenant pays, as a part of the rent, ✔✔no operating expenses of the leased space. A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of ✔✔anticipation A broker is showing a buyer one of his residential listings. The buyer says he wants to establish a day care center for seniors in the property. The property has been used as a day care center for no more than five children. How should the broker advise this buyer? ✔✔Provide the buyer with contact information for the local planning and zoning office to confirm the zoning and determine whether it permits his use. Antitrust laws prohibit competing brokers from all of the following EXCEPT ✔✔receiving compensation from both the buyer and the seller. A buyer wants to purchase a home for $60,000. The lender appraises the home for $58,000 and offers to finance it with an 80% loan-to-value loan, charging a loan origination fee of 1.5 points. How much will the buyer's loan origination fee be? ✔✔$696 An example of a contract terminated due to inability to perform would be one in which the ✔✔seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. A competitive market analysis is MOST often used for ✔✔setting a listing price. The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, ✔✔require the buyer to acknowledge disclosure of the presence of any known lead paint. A distinguishing characteristic of owning property by land trust is that ✔✔the identity of the legal owner is kept confidential=\ Refer to the scenario below. You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card. The first thing on Monday morning, Mrs. Martin calls and indicates they have tried to reach Mary and cannot. They indicate they have a written buyer's agent agreement with Mary's broker. They are afraid someone else is going to buy the house. Which of the following should you do? Select the best answer. 1. Seek advice from your supervising broker. 2. Tell them to come to your office. 3. Ask them to bring the buyer's agency agreement to you for your interpretation. 4. Tell them to be patient and continue trying to reach Mary. 5. Tell them to call Mary's supervising broker or branch manager. 6. Tell them you are really sorry, but there is nothing you can do. ✔✔Tell them to call Mary's supervising broker or branch manager. A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when ✔✔the seller accepts the offer. In an effort to improve his brokerage a broker decides to streamline his handling of escrow/deposit funds. This streamlining can BEST be achieved by ✔✔following state law but having as few individuals as possible handle the funds before they are deposited. Tenants are still in their rental property even though their lease has expired. The landlord has given them written notice to quit and refused to accept rent. They are ✔✔tenants at sufferance. To be valid, every deed must ✔✔be executed by the grantor. Refer to the scenario below. You are the supervising broker of a real estate company. On August 1, one of your licensees listed a house owned by an investor client. On August 10, a full-price offer was received from the buyer's agent, a licensee with a cooperating real estate company, and accepted by the seller. The buyer's agent indicated that the buyer is a transferee. The sale is to close on September 10, but on September 5, the buyer's agent informs the seller's agent that his client is not going to close and wants the earnest money refunded. Your firm is holding the earnest money. Which information is the most critical to be obtained? 1. The amount of transactions the buyer's agent has completed. 2. The number of times the buyer's agent met with the buyer before making the offer. 3. The reason why the buyer is not closing. 4. Verifying if there is a clause in the purchase agreement regarding the disbursement of earnest money following default. 5. What the source of the earnest money is. 6. If the buyer's agent tried to sell the buyer something else. ✔✔Verifying if there is a clause in the purchase agreement regarding the disbursement of earnest money following default. A real estate brokerage company has developed standardized policies regarding the inventory of properties to be shown to prospective buyers, the company's standards for qualifying buyers, and documentation of all conversations and showings. These policies can help the firm defend itself in the event of an accusation of discrimination, but only if the policies ✔✔require every licensee in the firm to follow them consistently. Legal descriptions using the government survey system are NOT generally used in ✔✔the original 13 states For a buyer, a DISADVANTAGE of a partially amortized or balloon payment loan is that ✔✔at the end of the term, all remaining principal must be paid in a single large payment. A seller signs a listing agreement with a broker. The seller can cancel the listing at any time without legal liability if ✔✔the broker violates the terms of the contract. A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? ✔✔Agency coupled with an interest. An owner lists her home at a 7% commission rate and wants to net $45,000 after paying the mortgage balance of $68,000 and the broker's commission. To the nearest dollar, what should the selling price be to net her $45,000? ✔✔$121,505 According to the principle of progression, a three-bedroom, one-story home is MOST likely to bring the highest sales price if located in a neighborhood in which ✔✔most homes are larger than the sale home. The FHA functions MOST like ✔✔An insurance company When a home is purchased using an ARM, the monthly loan payment on the mortgage will ✔✔vary over the life of the loan depending on fluctuations in the interest rate to which the loan is referenced. A broker learns that one of the licensees under his supervision, and the owners of a listed property, have worked out a scheme to withdraw a property from the market whenever a showing is requested by any buyer who seems to be from a foreign country. What is the most important action for the broker to take in this situation? ✔✔develop stringent policies for the firm, establishing the criteria that may be used to determine which properties are shown to prospects. Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? ✔✔The buyer finds a better property for better terms. Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? ✔✔Both contracts are valid. A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes maintenance of value over profitability? ✔✔The Department of Housing and Urban Development. The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should they give the prospective buyer? ✔✔Counteroffer. A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as ✔✔Steering. In the property condition disclosure form under "Asbestos", a broker reviewing an associated licensee's listing sees that the property owner reported that the asbestos siding on his building was not removed but was professionally encapsulated ten years ago. Documentation of this professionally applied process is attached. The broker should ✔✔instruct the listing agent to request that the owner have the siding re-inspected. On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. ✔✔$288 A tenant with a triple net lease rents a building that has the following yearly operating expenses: Property taxes $ 5,000 Utilities $ 7,000 Repairs & Maintenance $ 1,500 The tenant would be responsible for how much of these expenses? ✔✔$13,500 A licensee has entered into a dual agency agreement. In this situation, it is critical that all parties understand that it is impossible for the licensee to fully perform for either party the traditional common-law agency duty of ✔✔loyalty Refer to the scenario below. You are hosting an open house. Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. The Martins tell you the house is exactly what they are looking for and they are very interested in purchasing it. You then give them information showing the various types of financing available with down payment options and projected payments. Mr. Martin tells you they have been working with Mary Hempstead of XX Realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card. The Martins come to your office and explain that neither Mary nor her supervising broker are available. They insist you immediately write an offer for the house. How should you proceed? Select the best answer. 1. Write the offer after entering into a buyer's broker agreement with them. 2. Write the offer after explaining they may owe Mary's broker a commission. 3. Write the offer after trying to contact Mary's broker yourself. 4. Refuse to write an offer and explain that doing so would be unethical. 5. Refuse to write an offer since it would be illegal. 6. Refuse to write the offer and tell the Martins to contact another Salesperson in Mary's office. ✔✔Write the offer after explaining they may owe Mary's broker a commission. A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes cash flow or income over the maintenance of value? ✔✔An individual entrepreneur who owns several apartment buildings. A property owner died, having willed his real property to his two daughters. There is still a chance that they could lose the land for a variety of reasons, but it CANNOT be taken through ✔✔escheat A broker represents a group of investors who purchase single family residences when they can be found at very low prices. Their offers are typically made with $500 deposits and cash closings within 7 days of acceptance of the offers. When the last property closed, the investors suggested the broker keep the deposit money to be used for their next purchase, as yet not identified. What must the broker do with these deposit funds? ✔✔Return them to the purchasers. A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? ✔✔Seller. When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should ✔✔have short deadlines A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with ✔✔the builders An equal housing opportunity notice MUST be ✔✔displayed in the brokerage office. A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to ✔✔demand immediate payment of the entire note. A buyer made an offer on an apartment building. The offer was not acceptable to the seller. When the buyer refused to accept the seller's counteroffer, the seller agreed to accept the original offer. What MUST happen now? ✔✔Nothing; by making a counteroffer the seller released the buyer from the original offer. According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the ✔✔prepayment penalties and rebates. A mentally disabled person who has been declared incompetent by a judge wishes to enter into a contract. Under what conditions can such a person do so? ✔✔The person appointed by the court to act for the disabled person must contract on his or her behalf. If conditions for property use are included in a deed and these conditions are violated, what is the most severe potential penalty? ✔✔A court may order the return of the property to the original owner. An easement can be terminated by ✔✔merger of the titles Even with title insurance, the policyholder may still suffer losses arising from ✔✔land use change due to zoning ordinances. A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a foreclosure auction to a speculating investor for $88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is FALSE regarding the distribution of funds? 1. The first mortgagee receives $60,000. 2. The second mortgagee receives $23,500. 3. The second mortgagee receives nothing unless he forced the foreclosure auction. 4. The former owner receives $4,500. ✔✔The second mortgagee receives nothing unless he forced the foreclosure auction. A broker did NOT have a written independent contractor agreement with his salesperson. While showing homes to a family, the salesperson was involved in a car accident in which a child in her car was injured. Could the broker be held liable in this situation, and why? ✔✔Yes; the lack of an independent contractor agreement may classify the salesperson an employee and an employer may be held liable for the torts of an employee. Under the common law of agency, licensees owe the broker with whom they are associated all of the following duties EXCEPT 1. loyalty. 2. competence. 3. indemnification. 4. full disclosure. ✔✔indemnification. The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that ✔✔he is no longer the listing agent. A broker is developing a checklist to be used by licensees during the time period between writing a contract and closing. Which of the following items should be included in the "Property Inspections" section? ✔✔A place to list repairs, who will pay, and when repairs are to be completed. Which of the following statements best describes the risk taken by NOT recording a deed? ✔✔A subsequent purchaser's recorded deed could take precedence over any unrecorded instrument. Davis, Hernandez, and Moore are vested as tenants in common on a parcel of land. Each received a pro-rata undivided interest in the parcel. The total price was $120,000. Davis put up 40% and Hernandez put up $22,500. What percentage does Moore own (to the nearest tenth of a percent)? ✔✔41.2% A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent. ✔✔$225.00 At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? ✔✔Debit seller $300; credit buyer $300. he real estate agency relationship is best described as the ✔✔broker's representing the principal. An exclusive right to sell listing obtained by a broker associate belongs to ✔✔the employing broker only. A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should ✔✔tell the seller that the buyer will pay more. A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable? ✔✔The seller is heavily under the influence of alcohol at the time of signing. Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising? ✔✔"Catholics preferred." MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and ✔✔the sale price. A contract for the sale of a home has been signed by both parties. This contract will remain executory until ✔✔the transaction has closed. A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as ✔✔void A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not? ✔✔No, because it is appropriate to show any property for which the buyer is qualified. A potential buyer is interested in the residential property of your client. The buyer earns a living by making crafts and selling them from home and caring for children in the late afternoons. In this situation, you should ✔✔suggest the buyer check the zoning ordinances. Real property can be converted to personal property by ✔✔severance