Which one of the following elements does a valid option contract contain?
A list of the optionee’s financing options
An opt-out option for the optionor should the optionor be offered a better deal during the option period
A statement by the optionee of why the optionee wants to purchase the land
The sales price of the property or the way in which the price will be determined
Sanjeev leases a house from Clara, and the lease has an option contract attached that permits Sanjeev to buy the house if he chooses to exercise the option within three years. How large does the option fee need to be in order to be legally binding?
10% of the purchase price
1% of the purchase price
Any amount agreed to by the parties
At least $1,000
What type of contract is an offer to purchase a specific piece of real estate that does not obligate the offeror to buy it?
A buyer agency contract
A listing contract
An option contract
A sales contract
Hernando, a real estate attorney, is preparing an option contract for his client, Wilma. Hernando asks Wilma what she and the seller have agreed upon for the option period. Wilma said the seller was leaving that up to her, and she wanted to get Hernando’s opinion. What should Hernando put into the contract for the option period?
“Indefinite”
“N/A”
“Negotiable”
“Six months”
Grant owns a property that’s subject to an option contract. Grant is the ______.
Optee
Opter
Optionee
Optionor
Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______.
A deposit
A down payment
An option fee
Earnest money
Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who is the best person to help Cynthia prepare a lease option?
A real estate attorney
A real estate investor
A real estate licensee
Her landlord
To comply with the statute of frauds, an option contract must be ______.
In writing and signed by the optionee
In writing and signed by the optionor
In writing and witnessed by an attorney
On file at the local courthouse
Margo is the potential buyer of the property in an option contract. Margo is the ______.
Optee
Opter
Optionee
Optionor
Ezra’s lease on his condo includes an option to purchase. He told his landlord, Sherm, that he’s ready to purchase the condo, and they’ve negotiated a closing date. What kind of contract is the option after it has been exercised?
Bilateral
Executed
Unilateral
Voidable
Chevy is an optionee. What’s his sole responsibility?
Exercise the option.
Make an offer.
Make monthly payments.
Pay the option fee.
Which one of the following statements about the option period for a valid option contract is true?
If the contract doesn’t state the length of the option period, a court will require the optionor to make the option period for a “reasonable time.”
The contract doesn’t have to specify a specific length of time for the option period.
The optionee must purchase the property within the option period stated in the contract.
The optionor may sell the property to someone else during the option period.
11sect.unit6.CeSh.PreLic.Qonly.txt
In a neutral market, what pricing strategy may generate interest in the property, possibly prompting multiple offers?
Pricing above market value
Pricing at market value
Pricing below market value
Pricing in line with comparable properties
Your buyer clients are submitting an offer on a home where the seller is moving to another state and wants to expedite the closing process. What would be a good strategy for structuring an offer in this case?
Include an escalation clause.
Make a full price offer.
Offer a quick close.
Waive the appraisal.
Which of the following is a legitimate reason to counter an offer?
A $50 curtain
A cracked tile
A free-standing fire pit
Price
In what type of market is pricing a home below market value an especially good strategy, as buyers are scarce and unlikely to consider at or above-market homes?
Cold market
Hot market
Neutral market
Warm market
What’s an effective pricing strategy when listing a home in a cold market?
Price the home above market value.
Price the home above market value and decrease the price after a month if it doesn’t sell.
Price the home at exact market value.
Price the home below market value.
Kurt is pricing a home for a client in a cold market. It’s a great property, and he knows it would sell for above market value if the market were better. All things considered, what’s the best pricing strategy for the home?
Price the home above market value.
Price the home above market value and decrease the price after a month if it doesn’t sell.
Price the home at its exact market value.
Price the home below market value.
When a seller’s need is related to obtaining a specific price, what can a buyer offer to meet that need?
An escalation clause
A quick closing
Full price or more than full price
Waive appraisal
An offeror may revoke a purchase offer by ________before the offeree has accepted.
A counter-offer
Novation
Rejecting the offer
Withdrawing the offer
In a hot market, when all other sellers are listing at or above market rate, what pricing strategy will likely induce a bidding war?
Pricing far above market value
Pricing in line with comparable properties
Pricing just above market value
Pricing just below market value
Raphael received an offer to purchase his property that he felt was so low it was insulting, and told his agent to ignore it altogether. Three days after the offer expired, the same buyer made another offer, at list price, which Raphael accepted. Which of the following choices provides the best legal explanation for how the first offer was terminated?
Raphael rejected the offer by refusing to acknowledge it.
The buyer’s first offer was novated.
The offer expired through lapse of time.
The seller countered the offer with a new one.
Your buyer clients really like the patio set and bedroom furniture in the house you’ve just shown them. Because the market is hot, what would you advise they do?
Ask for the one thing they like best as part of their offer but not the other.
Ask for those items and more as part of their offer.
Ask for those items as part of their offer.
Don’t include those items in their offer.
Dani is in love with the ranch-style home on Cardinal Avenue, says she simply must have it, and is willing to pay cash. The seller is concerned about an appraisal. Which of the following would be a good strategy for structuring her offer?
Include an escalation clause.
Offer a quick close.
Waive the appraisal.
Waive the inspection.
If a seller is concerned about an appraisal for a cash purchase, what can a buyer do to address this need when structuring the offer?
Allow an escalation clause.
Offer a quick close.
Offer full price or more than full price.
Waive the appraisal.
Whoa—this market is hot, hot, HOT! You’ve had five offers come in since you listed your seller client’s home yesterday. Of the options listed, which is the best strategy?
Accept a middle-of-the-road offer, but on the condition that no home inspection repairs will be performed.
Have all buyers submit their “highest and best” offer, then help the seller decide which offer is most appealing.
Leave it on the market for another three days to allow time for even more offers to come in.
Reject the offers and put the home back on the market for the amount of the highest offer.
In what type of market could the buyer’s strategy be to offer 10% below list price?
Cold market
Hot market
Neutral market
Secondary market
Your buyer clients are submitting an offer on a newly built home in a very trendy part of town. The seller requires that the home be sold for at least $450,000. What is a good strategy for structuring the offer in this case?
Offer a quick close.
Offer full price or more.
Waive the appraisal.
Waive the escalation clause.
In what type of market could a buyer’s strategy be to ask the seller to pay closing costs?
Cold market
Hot market
Neutral market
Secondary market
Dan just listed a property two days ago and already has offers pouring in. It’s a hot market and properties are moving quickly. Which of these options is the best strategy?
Have buyers submit their “highest and best” offers and then help his seller decide which offer is most appealing.
Leave it on the market for a few more days to allow time for even more offers to come in.
Reject all offers and put the home back on the market for a higher price.
Submit only prime offers to his seller client.
When a seller counters the buyers’ original offer, what options do buyers have?
They can accept, counter, or reject the offer.
They can accept the offer and counter back.
They can only accept or reject the counter-offer.
They can only accept the counter-offer.
Your buyer client is making an offer on her first home. Although she can afford the full listing price, you advise her to offer 10% below the list price. What’s a good reason for doing so?
The market is cold.
The market is heating up.
The market is hot.
The market is neutral.
If a seller asks a buyer to waive the inspection contingency, how could the transaction process transpire and still protect the buyer?
Buyer has inspection, buyer makes offer, seller accepts offer
Buyer makes offer, inspection performed, seller accepts offer
Buyer makes offer, seller accepts offer, closing occurs, inspection performed
Buyer makes offer, seller accepts offer, inspection performed
In what type of market is a buyer cautioned against asking for personal items?
Cold market
Hot market
Neutral market
Secondary market
When a seller wants to expedite the closing process, what can a buyer offer to address this need?
An escalation clause
A quick closing
Full price or over full price
Waive appraisal
What happens to an initial offer from the buyer after a seller counters?
It becomes the back-up offer.
It’s accepted by the seller until the buyer accepts the counter.
It’s no longer in play.
Sellers cannot counter a buyer’s initial offer.
Which of these methods of terminating a purchase offer requires the offeree to accept the terms exactly as they are presented by the offeror?
Acceptance
Assignment
Counter-offer
Rejection
In a hot market, what pricing strategy may incite bidding wars?
Pricing far above market value
Pricing in line with comparable properties
Pricing just above market value
Pricing just below market value