Eddy is a seasoned real estate investor who specializes in retail properties. Eddy learned the power of using leverage early in his investing career. Leverage allows Eddy to realize a greater return on investment. Knowing this, what does Eddy most likely NOT do?
Raise money from investors to purchase properties.
Obtain a commercial loan from a bank.
Purchase properties using all cash.
Assume existing loans from the properties he buys.
Bobby is a licensed Florida attorney and a member of the Florida Bar. He is also a part-time property inspector and a loan officer. If Bobby decides to obtain his Florida real estate sales associate’s license, why may he be exempt from taking the 63-hour pre-license course?
Loan officers are exempt from taking the pre-license course.
Members of the Florida Bar are exempt from taking the pre-license course.
Property inspectors are exempt from taking the pre-license course.
Bobby will not be exempt from taking the pre-license course.
Ruby obtained a loan of $90,000 towards the purchase of her new home. If the loan was 75% of the purchase price, how much did she pay for the home?
$145,000 (Dollars)
$125,000 (Dollars)
$120,000 (Dollars)
$115,000 (Dollars)
Bill is the listing agent responsible for selling a single-family home. The house is in desperate need of repairs as it has been neglected for the last 12 years. In an effort to attract more buyers, Bill posts an advertisement online stating that the property is “move-in ready”. Has Bill violated any advertising guidelines?
Yes. Bill must disclose any material facts about the property in an online advertisement.
Yes. Since the house is in bad shape, Bill is required to disclose the seller’s reasons for selling the property.
Yes. This is a misleading advertisement.
No. The property is not significantly misrepresented.
Sam is looking to purchase his first multi-family investment property. If you were Sam’s agent, what risks about real estate would you explain to him?
There are no risks associated with real estate investing.
Real estate appreciates in value.
Real estate has historically been used as a tax shelter.
Real estate is an illiquid asset that cannot easily be sold.
Anthony does not have a Florida real estate license, but he set a goal to open his own real estate office in the next five years. What should Anthony do to obtain his goal?
Obtain his FL sales associate license, and after he gains enough experience, he must obtain his FL broker license.
Obtain his FL sales associate license, and after he gains enough experience, he must obtain his FL broker associates license.
Obtain his FL sales associate license and work for 12 months under the supervision of a licensed broker.
Obtain his FL broker associates license and join the NAR.
The owner of a beachfront property is tired of all the trash left on the beach by the general public. He put up a “Keep Out” sign on the high tide mark, but his attorney told him that was not a sensible move. What was the lawyer’s main concern?
The lawyer was concerned about the safety of the homeowner.
The lawyer had been contacted by the local homeowners’ association declaring the sign was unsightly.
The lawyer was concerned about the Doctrine of Prior Appropriation.
The lawyer was concerned about littoral rights.
The seller wishes to convey the property to a new owner. On the day of his appointment at the title office the seller falls ill, is rushed into intensive care and dies. Can the property legally be transferred at this time?
Yes. The seller wanted to convey the title, and the title company had all the paperwork ready.
Yes. The seller had already agreed to the price, the property can be conveyed.
No. The grantee was not given the opportunity to sign the deed.
No. The seller did not acknowledge the deed, sign as the grantor, and deliver to the grantee, the property cannot be transferred at this time.
Tom is looking to sell his own house. He decides not to hire a broker in an effort to save on the commission. Are Tom’s actions illegal?
No. As long as Tom reports his actions to FREC, a license is not required.
Yes. Only licensed real estate brokers can sell houses.
Yes. Tom must at least work under the supervision of a broker.
No. A homeowner can sell their own house without a license.
A 2 acre lot sold for $327,000. What was the price per square foot?
$3.75 (Dollars)
$2.10 (Dollars)
$0.87 (Dollars)
$8.70 (Dollars)
James sold his home for $379,000. If the real estate commission was 5.5%, how much commission did he have to pay?
$45,845 to the listing agent.
$20,845 to the buyer’s broker.
$20,845 to the listing broker.
$10,422.50 to the listing broker and $10,422.50 to the selling broker.
Mary owns an older home, which she’s looking to sell in the near future. She’s worried that there may be asbestos located throughout the house, so she decides to hire a professional to test for and remove any asbestos found. Where may asbestos be found in Mary’s house?
Foundation walls and floor joists.
Exterior paint, windows, and roof rafters.
Any wood stud partition wall.
Roofing shingles, floor tiles, and wall insulation.
Phil and Sandy are looking to purchase their first home together. Both of them recently graduated from college and are just starting to establish their careers. What type of loan will best work for Phil and Sandy?
An FHA insured loan because of the minimal down payment requirements and low interest rates for first-time home buyers.
A purchase money mortgage because of its higher interest rate.
An adjustable-rate mortgage because of the changing interest rate over time.
A VA loan because of its zero down payment option.
To speed up the process of surveying, surveyors use brass metal plates to record important information. The benchmarks, as they are called, are used to save time so surveyors do not have measure the datum plane each time. Benchmarks refer to what standard of measurement?
Feet above the earth
Square yardage of a cube
Feet above sea level
Square footage of an acre
David is a licensed agent who typically represents homeowners looking to sell their house. As an agent, David has limited authority when working with clients, and his duties are limited to those outlined in the listing agreement. How would you characterize David’s agency relationship?
David is a dual agent because he works with more than one seller at a time.
David is a universal agent because he signed a listing agreement with the seller.
David is a general agent because he works with more than one client at a time.
David is a special agent since he is only responsible for one property at a time with limited duties.
Mary purchases a property with the help of a fixed-rate loan. Why is Mary considered the mortgagor and the lender the mortgagee?
A mortgage is a legal document that gives the lender the right to foreclose on the property if Mary defaults on the loan. Mary gives this security to the lender, and in return, the lender gives Mary the loan. Since Mary is giving the mortgage to the lender she is considered the mortgagor.
Since Mary recently obtained the loan, she is still considered the mortgagor. Once the loan is paid off, she will be considered the mortgagee.
Since Mary obtained a fixed-rate loan, she is considered the mortgagor. If she obtained any other type of loan, she would be considered the mortgagee.
Mary is not considered the mortgagor. Since she received a loan from a lender, she is considered the mortgagee.
Mark is a broker who signed a listing agreement with a seller to sell their single-family home. A broker associate working under Mark brings a buyer to the seller and both parties sign the sales contract. Has Mark violated any agency laws?
Yes. This is an illegal dual agency relationship since Mark and the broker associate work together in the same office.
Yes. Mark is serving as a transaction broker, which is not permitted for residential properties.
No. This is a designated agency relationship.
No. A dual agency relationship is permitted for residential properties.
A retirement community restricts buyers to people 55 years and older. How will this restriction affect the value of the property?
The value of the property will be less due to the value characteristic of scarcity.
This restriction will not have any affect on the value of the property.
The value of the property will be higher due to the value characteristic of demand.
The value of the property will be less due to the value characteristic of transferability.
Abby is looking to purchase a house in Palm Beach, FL. She narrowed her search down to two possible houses. Both houses are of similar size; however, one house is on the beach front, while the other house is further in-land. The beach front property is 25% more expensive. Why would this be the case?
There is less demand for beach front property with more supply available. This scenario drives up prices.
The beach front property includes a higher cost of insurance, which drives up prices.
The beach front property is located in a flood zone, which drives up prices.
There is more demand for beach front property with less supply available. This scenario drives up prices.
Mark and Elizabeth enter into a sales contract to purchase Elizabeth’s house. Mark completes his due diligence on the house, obtains financing from a lender, and is now on his way to the closing. What is the ideal way to discharge the sales contract?
Mutual agreement of the parties. Both parties agree to terminate the contract.
Full performance. The two parties close on the house as per the sales contract.
Impossibility of performance.
Operation of law. A judge requires specific performance from the seller.
Martha is in the process of selling her house. If her 2,000 sq.ft. house was built in 1972, why should Martha include a lead-based paint disclosure with the sale of the property?
Residential properties built prior to 1978 require a lead-based paint disclosure.
A lead-based paint disclosure is always optional, but considering the size of her property, it is best to include one.
A lead-based paint disclosure is always required with the sale of a residential property over 1,500 sq.ft.
A lead-based paint disclosure is not required in this case.
The buyer of an industrial complex wants the broker to place the earnest money in an interest bearing account. The broker does this, clearly identifying all parties who are to receive the interest and the date the earned interest is to be disbursed. With only the verbal consent of the buyer, he places the money in an insured account in a depository in Florida. When the time comes to disburse the account, the broker will write a check to the buyer for the interest as the buyer agreed. Which statement describing this situation applies?
The broker is able to follow the buyer’s instructions without the seller’s permission.
The broker must obtain the seller’s permission to do this in writing prior to following the buyer’s instructions.
The broker must not transfer the interest into a non-interest bearing account before disbursement.
The broker does not have the right to ever use an interest-bearing account under Florida Real Estate laws.
Charles is looking to purchase his first investment property. He is looking at multi-family properties with stable income. What metric should Charles use to help determine the risk associated with each property he views?
The capitalization rate used to value each property.
The net operating income.
The interest rate on the existing loan.
The effective gross income.
Sara is a homeowner looking to sell her house. She hires James, a licensed Florida broker as the listing agent. Eric is a prospective buyer looking to make an offer on Sara’s house. How would you characterize each party’s role from the seller’s perspective?
James is the agent, Sara is the customer, and Eric is the client.
James is the agent, Sara is the client, and Eric is the customer.
James is the client, Sara is the agent, and Eric is the customer.
James is the client, Sara is the customer, and Eric is the agent.
Robin and Marcy enter into an Exclusive Agency agreement. What is the ideal way Robin and Marcy can terminate the Exclusive Agency agreement?
Robin and Marcy to go arbitration.
A mediator is hired to resolve the Exclusive Agency agreement.
Robin finds a buyer for Marcy and the parties close on the transaction.
The agreement expires and both parties walk away from the contract.
As a listing agent, a broker’s fiduciary duties do NOT include which of the following?
Keeping the Principal’s best interest above his own.
Confidentiality.
Presenting all offers to the Principal.
Indicating to a buyer the price the seller will accept.
Mrs. Johnson failed to renew her sales associates license last year. Her license is now on inactive status. What can Mrs. Johnson do to reactivate her license?
Complete the required continuing education, submit a renewal application and pay the renewal fee.
Simply pay the renewal fee online.
Submit a renewal application online. There are no reactivation fees required.
Retake the 63-hour pre-license course, pass the state licensing exam, and apply for a new license.
Lucy is working with a lender to obtain a home loan. The lender gives Lucy a quote of 4.5% with a monthly payment of $1,256. Lucy would like to decrease the monthly payment. How can Lucy go about reducing her monthly home loan payment?
Lucy can purchase discount points upfront to reduce the interest rate on the loan.
Lucy can pay a loan origination fee after the loan closes.
Lucy can purchase discount points upfront to increase the interest rate on the loan.
Lucy can negotiate for a higher interest rate.
Brandon has been living in the same neighborhood for over 30 years. In recent years, he has seen a surge in population due to new corporate businesses setting up shop in town. The surge in population has also come with a surge in real estate prices. Why would this be the case?
As population increases, supply will also increase, which drives up prices.
As population increases, oil prices decrease, which leads to an increase in prices.
As population increases, so does demand. An increase in demand leads to an increase in prices.
As population increases, demand decreases. A decrease in demand leads to an increase in prices.
A typical monthly home loan payment includes principal, interest, taxes, and insurance. Why do lenders require borrowers to contribute to their annual property taxes with each monthly loan payment?
It serves as security for the lender. This way the lender ensures the borrower’s taxes are paid each year and a tax lien will not be placed on the property.
It allows the borrower to pay less in property taxes each year.
A borrower never pays a portion of their annual taxes as part of their monthly loan payment. Instead, they make a single lump-sum payment each year.
It allows the borrower to write-off their tax payments when filing their personal income taxes.
Joe took out a loan to purchase a new house. In return, Joe’s lender placed a lien on the property. Is this legal?
No. A lender is never allowed to place a lien on a property as long as the borrower is up-to-date on their payments.
Yes. This is a voluntary mortgage lien that allows the lender to foreclose on the property if Joe defaults on the loan.
Yes. However, the lien is only valid for 12 months.
No. Only Joe can place a lien his property.
A sales associate presents an owner with an offer for $175,000 on behalf of a buyer. The owner countered at $185,000. While the buyers are considering their response, the owner sends an email rescinding the counteroffer. Which of the following statements is correct?
The sales associate must be paid the full commission.
The seller has signed the counteroffer so it stands.
The buyers are the only ones that can rescind the counteroffer.
There is no contract.
A 150-year-old 3-story mansion in the center of town has one bathroom on the first floor and two half baths on the third floor. It has a single car garage and no rear access. The appraiser depreciated the value of the home based on…?
Environmental obsolescence.
Physical deterioration.
Functional obsolescence.
Square foot cost.
Chris was recently hired by a homeowner to sell their single-family home. The homeowner wants to list the property for $649,000; however, Chris strongly believes the current market value is only $620,000. What should Chris present to the homeowner to justify his price?
Chris should present print-outs of three similar properties currently on the market.
Chris should prepare an appraisal.
Chris should prepare a property survey.
Chris should prepare a comparative market analysis using recently sold properties in the area.
Aaron and Melissa are looking to sell their house for $700,000. They purchased the house seven years ago for $480,000 and didn’t have any adjustments to factor in. If Aaron and Melissa sell their house for $700,000, how much will they have to pay in capital gains?
$220,000. All sellers have to pay capital gains on the sales price minus the price they originally paid.
$0. Capital gains is only paid on commercial properties.
$700,000. Married couples are required to pay capital gains on the final sales price.
$0. The $500,000 capital gains exclusion will allow them to write off any profits earned on the property.
Eric owns an irregularly shaped lot in a residential neighborhood. The yard and setback requirements outlined in the local zoning laws will not allow him to build a house on the lot. How can a variance help Eric in this situation?
A variance cannot help Eric in this situation.
A variance will allow Eric to build an industrial building on his property, which is not subject to any yard and setback requirements.
A variance will allow Eric to build a commercial building on his property, which is not subject to any yard and setback requirements.
By proving hardship, Eric will most likely be granted a waiver on one or more for the yard and setback requirements, which will allow him to build a house on his property.
Neil recently obtained his Florida sales associates license. He then decides to open his own office and hire four sales associates to work under him. Neil and his four sales associates agree to split any commissions earned by the four associates 50/50. Has Neil violated any licensing laws?
No. All of Neil’s actions are permitted under state law.
Yes. As a sales associate himself, Neil is only permitted to take up to 25% of the commissions earned from other sales associates.
No. If a sales associate runs their own office, they are permitted by law to hire up to four sales associates to work under them.
Yes. Only licensed real estate brokers can open their own office and hire sales associates to work under them.
If a buyer defaults on a contract for sale after paying $7,000 in earnest money as a deposit, what happens to the earnest money?
The broker keeps the $7,000.
The buyer gets the money back.
The seller and the listing broker split the money between them.
The seller keeps the $7,000.
David owns a restaurant in downtown Sarasota. When David’s lease is up, what happens to his cooking stoves and dish washing machines?
These items are considered trade fixtures and thus owned by David. David will take these items when he moves from the property.
These items are considered fixtures and will stay with the landlord.
These items are considered trade fixtures and will stay with the landlord.
These items become emblements and belongs to both David and the landlord.
John owns a small rental cottage in St Augustine and his mother Brenda lives nearby in a rented apartment. He is concerned about her having a secure home to live in after her retirement so he decides to convey the cottage to her for the rest of her life, after which, ownership will revert to him. What would John’s attorney probably have advised him to do to achieve these goals?
Convey a life estate to Brenda with the right of reversion to John.
Establish a Trust with his mother as one of the trustees.
Convey a tenancy at sufferance to Brenda.
Convey a tenancy by the entireties to Brenda, pur autre vie.
Jessica’s house sells for $235,000 and she pays a 6% real estate commission to the listing broker, Oscar. Oscar keeps 55% and gives the co-operating broker the balance of the sales commission. If Harry, the listing broker’s agent, earns 65% of the commission that his broker receives, how much commission does Harry earn?
$4,124.25 (Dollars)
$9,165.00 (Dollars)
$5,040.75 (Dollars)
$5,689.25 (Dollars)
Rachel was recently hired as a buyer’s broker. Her client is looking to purchase a new house in Orlando, FL. Before starting to show properties to her client, what should Rachel encourage her client to obtain?
A commitment letter from a lender, which will allow the client to quickly close on a property.
A Closing Disclosure from a lender.
A pre-approval letter from a lender, which essentially indicates how much the client can afford to pay for a property.
A pre-qualification letter from a lender, especially since it is quick and easy to obtain.
A buyer made an offer on a property on September 25th. The Seller countered on September 26th. Both parties signed the purchase contract on September 28th. The property closed on December 31st. What is the effective date of contract?
September 26th
December 31st
September 25th
September 28th
A borrower needs a fixed-rate home loan in order to purchase a new house. The lender requires a minimum 20% down payment, which also serves as equity for the borrower. What happens to the borrower’s equity over time?
The borrower’s equity will increase since the principal balance on the loan will decrease with each monthly loan payment.
The borrower’s equity will decrease since the principal balance on the loan will also decrease with each monthly loan payment.
The borrower’s equity will decrease since the monthly loan payment will increase every 12 months.
The borrower’s equity will increase since the interest rate on the loan will also increase.
Ken is an appraiser who was hired to appraise a single-family home. Ken’s subject property is similar to many of the houses in the neighborhood since much of the neighborhood was built around the same time. Why would the sales comparison approach be the most effective valuation method for Ken?
Since the property has the potential to be rented out, the sales comparison approach should be used.
Since the cost to rebuild the property can easily be determined, the sales comparison approach should be used.
The cost approach should be used by Ken rather than the sales comparison approach.
Residential properties are typically valued using the sales comparison approach, and Ken will most likely have several comparable properties to use to value the subject property.
A broker found a ready, willing, and able buyer who offered full price for a home. The seller refused to sell because the buyer was Asian. Which of the following was NOT a legal course of action for the broker?
Advise the prospective buyer that HUD may be able to assist him.
Follow the seller’s instruction to only show the property to white Caucasians.
Inform the seller of the possible violation of the Federal Fair Housing laws.
Bring a suit against the seller for his commission.
In the government survey method, how many acres does a section with a land area of one square mile contain?
620 acres.
460 acres
520 acres
640 acres
What is the name of the clause that permits the lender to declare the entire unpaid balance immediately due and payable upon default?
The lis pedens
The alienation clause
The defeasance clause
The acceleration clause
Bobby takes out a home loan to purchase a new house in Miami, FL. Assuming Bobby gets to keep equitable title to the property while the lender takes legal title, what will happen if Bobby defaults on the loan?
The lender will initiate the judicial foreclosure process.
Since Bobby holds equitable title to the property, the lender can never foreclose on the property.
The lender will initiate the non-judicial foreclosure process.
Since the lender holds legal title, they can quickly take back the property.
James is looking to enter into a listing contract with Mary to sell her house. The two are trying to come to an agreement on what type of listing contract to use. What type of listing contract will offer James the least amount of protection?
An Exclusive Agency agreement since the owner can still find a buyer themselves.
An Exclusive Agency agreement since it is a unilateral contract.
An open listing agreement since it is a unilateral contract.
An exclusive Right to Sell agreement since it is a bilateral contract.