Marty is looking to enter into a listing contract with Jane. Jane is negotiating for an Exclusive Agency agreement, while Marty prefers an Exclusive Right to Sell agreement. Why would Marty prefer an Exclusive Right to Sell agreement over an Exclusive Agency agreement?
An Exclusive Right to Sell agreement offers Marty the most protection as he will be entitled to a commission regardless of who finds the buyer.
An Exclusive Right to Sell agreement will allow Marty to work less hours on the deal.
An Exclusive Right to Sell agreement will give Marty the highest commission possible.
An Exclusive Right to Sell agreement will give Marty an extra 12 months to sell the property.
Isabelle entered into a contract to purchase Mark’s house. Isabelle will make a 25% down payment; however, she still needs a loan to close on the property. Why should Isabelle include a mortgage contingency in the sales contract?
The mortgage contingency will allow Isabelle to close on the property more quickly.
A mortgage contingency is not needed in this case since it usually applies to commercial properties.
The mortgage contingency will allow Isabelle to back out of the contract if the property fails to pass inspection.
There is no guarantee that Isabelle will get approved for loan. A mortgage contingency allows Isabelle to back out of the contract if she can’t get a loan and still get her earnest money back.
Sal paid his annual homeowners insurance on January 10th. He eventually sells his property on March 27th. How will Sal’s homeowners insurance be categorized on the settlement statement?
The buyer will receive a debit for the homeowners insurance paid after March 27th.
The buyer will receive a credit for the homeowners insurance paid after March 27th.
Sal will receive a credit for the homeowners insurance paid after March 27th.
Sal will receive a debit for the homeowners insurance paid after March 27th.
David is looking to purchase an old church building. He hires an appraiser to help determine the market value of the property. Why would the appraiser most likely value the property using the cost approach?
The income capitalization approach should be used rather than the cost approach.
The church building will most likely have income, which when a capitalization rate is applied will help determine the market value.
A church building will have at least three comparable properties to use to help determine the market value.
A church is a specialty building that will most likely not have any comparable properties. It is also not an income producing property, so the best method would be the cost approach.
After a complaint was filed against him, Broker Ike was found guilty of a license law violation. He was fined and had to pay legal fees totaling $8,900. This was paid by the Recovery Fund. What else is likely to happen to Broker Ike?
The FREC will revoke the Ike’s license.
The FREC can issue a citation and the Ike’s license becomes involuntary inactive.
The FREC declares Ike’s license null and void.
The FREC will suspend the Ike’s license until the fund has been repaid in full.
Mark is purchasing a house for $480,000 using a $360,000 home loan. Mark’s lender is charging a loan origination fee of 1.5 points. How much will Mark pay in origination fees?
$7,200 (Dollars)
$5,400 (Dollars)
$720 (Dollars)
$540 (Dollars)
Phillip is a broker who was hired by Sam to help him find a new investment property. Phillip identifies a property that fits Sam’s investing criteria. Sam asks Phillip to do some research and provide him with an opinion of title on the property. Is Phillip permitted to do this?
Yes. Brokers are always permitted to issue an opinion of title.
Yes. As long as Phillip notifies FREC, he can issue an opinion of title.
No. Phillip needs his sales associates license in order to issue an opinion of title.
No. This would be considered an unauthorized practice of law.
John owns a house in Fort Meyers, FL. He wants to build a pool in his back yard, as he believes he can use the pool year-round. Why might installing a pool increase the value of John’s house?
Based on the principle of highest and best use, a pool is a requirement in Florida.
Based on the principle of change, market conditions will require a pool.
Based on the principle of contribution, most future buyers will place a high value on the pool.
Based on the principle of anticipation, a pool will appreciate in value.
James is looking to purchase a single-family home. He needs to obtain a loan in order to complete the purchase but lacks good credit. Why may James opt for an installment sales contract with the seller rather than obtain a traditional mortgage from a lender?
An installment sales contract will typically included a lower interest rate.
An installment sales contract is a form a seller financing that offers much more flexibility compared to a typical mortgage.
An installment sales contract can be obtained from more lenders compared to a typical mortgage.
An installment sales contract is interest-free for the first 12 months.
For an option fee of $6,000, a seller provided an option to a buyer for 90 days to purchase the property for $100,000. However, during the option period, the seller decides not to go ahead with the deal. What will occur next?
The seller must notify the buyer before walking away from the deal.
The seller gets to keep the $6,000.
The seller must follow through with the deal as per the options contract.
The seller should notify their agent in-writing.
When a broker is changing from a single agency relationship with a seller to a transaction broker, at what point in the transaction does this actually happen?
Only when the buyer consents in writing.
At any time during a transaction, as long as the seller gives consent in writing.
After the offer is signed.
At the closing.
Ted, Will, Mike, and Tom own a 20-room home as tenants in common. Mike and Tom, two of the owners, decide to sell to two new owners, Larry and Joe. Can this be legally done?
Yes, because Mike and Tom are only silent partners.
No, because there is only one title to a property.
Yes, because in a tenancy in common, each owner has the right to sell their interest in the property.
No, because a co-owner’s interest in the property goes to the other owners at death.
Peter is a sales associate who pressured an elderly home owner to let him list her house so that she can move into an assisted living home. He told the homeowner that the neighborhood is deteriorating and becoming unsafe. What is Peter doing?
He is blockbusting, which is a violation of Federal Laws.
He is farming an area.
He is committing mortgage fraud.
He is looking after the old lady’s best interests.
As a result of a major hurricane, Hector’s property, which was in a specialized flood hazard area experienced heavy flooding. Which insurance will allow Hector to recoup part of his losses?
National Flood Insurance
His homeowner’s policy
Contents coverage
Private mortgage insurance
Jason buys a large vacant lot in a predominantly residential neighborhood. He wants to build a building on the land, which will give him the largest return on investment. He figures a large high-rise office building will do the trick. Why would Jason most likely not be able to build a high-rise office building on his property?
The Department of Health will not permit such a building in a residential neighborhood.
Real estate developers can no longer build high-rise office buildings.
The local zoning laws will not permit a high-rise office building in a residential neighborhood.
HUD does not permit commercial buildings in residential neighborhoods.
Jason’s house was built in 1968. He’s looking to sell his house in the next 6 months, but first wants to be sure there are no material defects with the house. What should Jason test for first?
Electrical charge in each outlet.
Argon gas since his house was built prior to 1988.
Lead-based paint since his house was built prior to 1978.
Water temperatures in the bathrooms.
Jane put her house on the market a few weeks ago. However, she just received a job offer in California. She now needs to sell immediately. What should Jane tell her broker?
Decrease the broker’s commission by 50% in an effort to gain more interest in the property.
Decrease the price of the house in order to obtain more offers on the property.
Stop showing the property to prospective buyers.
Increase the price of the house in order to obtain more offers on the property.
Why might a borrower prefer a fully amortizing loan over an adjustable-rate mortgage?
The interest rate may increase over the term of the loan.
The principal and interest payment varies each month.
The payment towards interest increases as the loan is amortized.
The monthly mortgage payment will remain constant throughout the term of the loan.
Jane recently purchased a house using a home loan. Her home loan is a fixed-rate, 30-year loan. When will Jane’s interest payment be the highest?
Her highest interest payment will occur when she sells the property.
The amount she pays in interest each month will always be the same.
Her first loan payment will have the highest interest payment. The amount paid in interest will then decrease with each monthly loan payment.
Her final loan payment will have the highest interest payment.
The buyer and seller are scheduled to close the sales transaction on Wednesday, June 14. The taxes for the year were $3,500 and were paid in arrears. How would this appear on a closing statement?
A credit to the seller and a debit to the buyer.
A credit and debit to the buyer.
A credit and debit to the seller.
A credit to the buyer and a debit to the seller.
Lisa purchased her home 5 years ago for $265,000. Lisa stopped making payments on her home loan, and unfortunately, the real estate market has gone down significantly in recent years. Lisa needs to sell her home immediately to avoid foreclosure; however, her property is now only worth $189,000. What should Lisa do next?
Simply walk away from the property.
Work with her lender to sell her property as a short sale.
Take out a second mortgage to catch up on her home loan payments.
Sell her property off as an REO.
James is working with several mortgage brokers to secure a loan to purchase a new house. He plans on living in the house for many years to come and wants a loan that will have minimal risk. What type of loan should James get?
A term loan. This will allow James to have smaller monthly payments with a balloon payment at the end of the loan.
A negative amortizing loan. This will allow James to pay off the loan more quickly.
An adjustable-rate mortgage. His loan payments will adjust over the life of the loan.
A fixed-rate loan. His loan payments will remain constant, which will allow him to properly budget for the payments.
June is looking into buying her first home. She is shown a number of houses on the market, but the market appears to be sluggish because there are so few buyers. Interest rates are steady and June has several good prospect homes to choose from at reasonable prices. June is in a…?
Builder’s market
Buyer’s market
Lender’s market
Seller’s market
If unauthorized practice of law is considered to be the practice of law by someone who has not been licensed to practice law, which of the following could present legal problems for a sales associate?
Offering to be with the buyer at the closing.
Discussing a home value based upon comparables in the area.
Suggesting that the buyer contact an attorney to add clauses to the contract.
Offering an opinion on the title on a property.
Arnold owns a home with the following liens: 1) Mortgage lien. 2) Mechanic’s lien dated 12/2/2011. 3) Tax lien. 4) Mechanic’s lien dated 6/8/2019. Which lien takes the highest priority and why?
The mortgage lien because lenders always require other liens to be junior to the mortgage lien.
The mechanic’s lien dated 6/8/2019 since it was filed last.
The tax lien because tax liens always take the highest priority. The government always gets paid first.
The mechanic’s lien dated 12/2/2011 since it was filed first.
Last month, Alex obtained his Florida real estate sales associate’s license and already closed his first deal. He’s wants to accelerate his career by opening up his own real estate office and have other real estate sales associates work under him. Can Alex do this?
Yes. Sales associates are permitted to open their own real estate office after closing their first deal.
No. He must first obtain worker’s compensation insurance, which cannot be obtained until he has at least 12 months of experience as a sales associate.
Yes. A sales associate can open their own office at any time.
No. He must first obtain his Florida real estate brokers license, which will require at least 24 months of experience as a sales associate, and completion of the broker’s course and FL broker’s exam.
Evangeline, an 80-year-old widow living alone, has a fixed income of $11,000 per year from social security. If the local option homestead relief exemption exists in Evangeline’s county of residence, what might she be entitled to?
A Homestead exemption of $10,000.
No exemption at all since she lives on Social Security.
An added Homestead exemption of $50,000 if she initially applies in person.
A Homestead exemption of $5,000, which is a standard deduction.
A condo is purchased for $110,000 with a loan for $85,000. If the interest rate was 3% with 3 discount points. What did the lender charge for the points?
$5,520 (Dollars)
$2,550 (Dollars)
$3,350 (Dollars)
$4,150 (Dollars)
Last month, Wendy received her Florida real estate sales associates license. What is Wendy required to do before her first license renewal date?
She must apply for her broker’s license.
She must complete 45 hours of post-license education.
She must close at least one real estate transaction.
Wendy is not required to do anything once she obtains her sales associate license.
The buyer and seller were arguing over a small river rock fountain, which before closing had been sunk into the patio and cemented in place. No mention of the fountain had been made during negotiations and both sales associates believed the fountain would stay. When the buyer went by to pick up the keys after closing, the fountain was gone and in its place was a small wooden windmill and 2 plastic gnomes. The seller claimed the fountain was personal property and the buyer claimed it was a fixture. Which statement about the fountain is true?
The fountain should have been listed by the buyer in the contract. Since it was not, it is personal property.
The fountain was purchased by the seller. It should always be his.
Even though the fountain was cemented into the ground, it is definitely personal property and does not have to be left for the buyer.
The method of attachment in this case was cement. Clearly the item was affixed and permanent.
Cindy is in the process of selling her property. This closing is set for March 12th. Cindy already paid her annual property taxes on November 15th. Why should Cindy receive a partial credit for property taxes on the settlement statement?
Cindy paid a year’s worth of property taxes on November 15th, but will only live in the property until March 12th. The buyer must reimburse Cindy for the property taxes already paid from March 12th through the end of the tax year.
Cindy will not receive a credit for the property taxes since each owner is responsible for a year’s worth of tax payments, regardless of how long they lived in the property.
Cindy paid a year’s worth of property taxes on November 15th, which means she must get reimbursed by the seller for the days between November 15th and March 12th.
Cindy will not receive a partial credit. Instead, the pre-paid property taxes will be listed as a debit towards Cindy.
Nick owns a single-family home, which he rents out for $1,600 per month. According to the IRS, over how many years will Nick’s property depreciate?
10 years
100 years
27.5 years
39 years
What is the system that uses measurements, monuments, compass readings, and a POB?
Plat maps
The rectangular government survey
Metes and bounds
The geological government survey
Kathy receives her real estate license. Within a month of receiving her license, she gets a new job offer she can’t refuse. She decides to continue to hold her license but not practice, do any real estate work, or collect any referrals at this time. She is willing to renew her license, do her continuing education, and pay the renewal fee for her license. What should Kathy do?
Seek an involuntary inactive license.
Opt not renew her license or complete the educational requirements.
Seek a voluntary inactive license.
Seek a broker who will not be upset if she does not work too hard.
An office building has an effective gross income of $1,240,000. The operating expenses are $460,000, and the amount paid in mortgage payments equals $380,000 per year. What is the net operating income of the property?
$780,000. Mortgage payments are not factored into the NOI.
$400,000. The yearly mortgage payments must be factored into the NOI.
$1,240,000. The NOI always equals the effective gross income.
$860,000. The NOI always equals the effective gross income minus the yearly mortgage payments.
A homebuyer recently obtained a loan to purchase a house. The lender offered a lower interest rate because the loan is secured. Why would a real estate loan be considered a secure loan?
Most home loans are long-term loans, which are considered low-risk from the lender’s perspective.
All real estate loans are considered unsecure.
In order to qualify for a home loan, the borrower must have good credit. Good credit is a form of security for the lender.
The loan is backed by the property itself. If the borrower defaults on the loan, the lender can sell the property to get their money back.
A broker enters into a listing contract with a seller. The broker markets the property for several weeks and receives four offers. The seller selects the highest bid and ultimately closes on the property. However, the seller refuses to pay the broker their commission. What happens next?
The broker can take legal action against the seller to obtain the commission owed to them since they successfully found a buyer for the property.
The broker can negotiate a smaller commission with the seller.
The broker can force the buyer to pay the commission.
The broker cannot do anything as a commission in this case is only optional.
Alex is a transaction broker who represents the seller in a transaction. The seller is looking to sell their single-family home. Based on the following facts, what is Alex required to disclose to prospective buyers: 1) There are cracks in the house’s foundation. 2) The house has not been painted in over 20 years. 3) Based on the local zoning laws, the house cannot be expanded.
Alex does not have to disclose anything since transaction brokers are not required to do so.
The seller must disclose the cracks in the foundation, and Alex must disclose the remaining two facts.
Alex must disclose the cracks in the foundation only, since this is considered a material fact.
Alex must disclose all three of these facts since a transaction broker must disclose everything he knows about the property.
The FREC is investigating a claim against a broker for failure to properly disclose a material fact before a sale closed four years ago. The broker keeps all his records for three years and has a policy of keeping records for an additional year after any legal action has been taken. Is his record keeping in order?
Yes. The broker had the records at the time of the investigation.
No. The buyer can sue even if there are detailed records.
No. The records need to be kept for five years from the date of the start of the transaction and an additional two years after any legal action.
Yes. All the records he has date back three years except the ones where legal action has occurred.
Martin owns an older home, which requires minor renovations. However, the neighborhood where Martin lives mostly includes newly constructed luxury homes. Why might Martin’s home increase in value?
Based on the principle of regression, the newly constructed homes in the neighborhood will increase the home values of the entire neighborhood.
The value of Martin’s home will decrease due to the new competition in the neighborhood.
Based on the principle of substitution, the value of Martin’s house will equal the value of the newly constructed homes in the neighborhood.
Based on the principle of progression, the newly constructed homes in the neighborhood will increase the home values of the entire neighborhood.
What is the term for a lender refusing to lend in certain areas because of race, color, national origin, or religion, regardless of an individual person’s ability to pay?
Redlining
Panic peddling
Blockbusting
Steering
Arthur recently selected a broker to sell his house. Arthur and the broker are now in the process of finalizing the listing agreement. How should Arthur determine how much he should pay the broker as a commission?
The commission must be set to 6% of the sales price as dictated by FREC.
A listing broker is not entitled to a commission.
The commission must be between 3-6% of the sales price as per NAR guidelines.
Arthur must negotiate with the broker until both parties agree to a commission.
John has a 15-year mortgage, which he has been paying off for over 14 years. John elects to pay off the remaining balance of the loan in one lump sum. In return, the lender gives John a Satisfaction of Mortgage letter. Why is this important?
The lender will pay John a full payment bonus.
All liens on John’s property will be released.
The lender will place a mortgage lien on John’s property.
The lender will release the mortgage lien on the property.
A buyer bought a property without telling the seller or broker of his intended purpose for the property. The contract contained no contingency clauses and was properly signed and executed. He became very angry when he was unable to obtain the zoning for the commercial project he had planned and now wants to declare the contract null and void and get his money back. What is the status of the contract at this time?
This is a breach of contract since the buyer cannot use the property.
This is an implied, valid contract.
This is a voidable, enforceable contract.
This is a valid, enforceable, executed contract.
A property was listed for $640,000, but eventually sold for $580,000. The seller paid a commission of 5%. How much did the listing broker earn as a commission?
$18,550 (Dollars)
$5,565 (Dollars)
$32,000 (Dollars)
$29,000 (Dollars)
Two offers were received by the broker at the same time, what action must the broker take?
Wait 24 hours for more offers to come in and present them all together.
Only present the offer with the least number of contingencies.
Only present the highest offer.
Present both offers to the seller.
A homebuyer needs to obtain a home loan to close on a house. Who should the homebuyer contact to get the best loan terms?
A large commercial bank since these banks can obtain money at a cheaper rate.
A mortgage broker since a broker can work with multiple lenders at once.
The seller of the property since the seller can offer a purchase money mortgage with flexible loan terms.
A hard money lender since they can create a custom loan package for the homebuyer.
Andrew recently obtained a loan to purchase a house in Tampa, FL. Considering Florida is a lien theory state, which of the following answer choices best describes the arrangement of Andrew’s loan?
Andrew holds both legal and equitable title to the property.
Andrew holds equitable title to the property, while the lender holds legal title.
Andrew holds legal title to the property, while the lender holds equitable title.
The lender holds both legal and equitable title to the property.
If the branches of a neighbor’s tree overhang a fence and look like they are going to damage the screening around the pool, does the owner of the screened pool have a right to have the branches removed?
No. The tree should be allowed to grow naturally.
Not without suing his neighbor.
Yes. The tree is encroaching on the property.
Not without arbitration.
Mary is trying to qualify for a home loan but her lender tells her that her debt-to-income ratio is too high for FHA standards. What can Mary do to qualify for an FHA loan?
Take out an equity line of credit to pay for the down payment.
Decrease her credit score.
Transfer some of her existing debt to one or more credit cards.
Pay off one or more of her existing loans, such as a car loan or credit card debt.