Which type of insurance must a buyer obtain if a mortgage is involved?
Auto insurance
Homeowners fire and hazard insurance
Life and casualty insurance
Medical insurance
Who’s responsible for verifying that a client knows what documentation to bring to closing?
The client
The lender
The licensee who’s representing the client
The title insurance representative
How is the broker’s commission usually paid out?
All brokers are paid through the joint fund held by the buyer’s lender representative.
Escrow creates checks for both agents’ brokerages, which in turn cut checks to the agents for their commission split.
Only one commission check is cut based on the commission statement and is given to the seller’s representative and disbursed from that brokerage to the cooperating broker.
The licensee representing the seller and the licensee representing the buyer each receive separate checks at the time of the closing.
What’s part of the licensee’s role in the closing process?
Nothing
Paying the closing fees
Preparing clients for closing
Preparing the closing documents
Bradley listed a house at an 8% commission rate, and it just sold for $723,500. As negotiated, his brokerage firm agreed to pay the buyer’s agent’s firm 40% of the total commission earned. Then Bradley, who has a 60/40 commission split with his broker, took his check to the bank. How much did Bradley earn from this transaction?
$13,891
$20,836.80
$23,152
$57,880
You’re the agent for the Brewmans, who have listed their house for $425,000 and agreed to a commission rate of 5%. They’re eager to sell, so even though the house is listed at $425,000, the Brewmans want to accept the first offer of $395,000. How much less will the Brewmans pay your broker in commission if they accept this offer?
$1,000
$1,100
$1,300
$1,500
If Hal sold his client’s listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal’s commission be if he charged 5%?
$10,000
$11,500
$13,500
$16,000
Chaz represents the buyer in a transaction that has just closed. How will he typically be paid?
He will be paid at closing by cashier’s check from the buyer.
He will be paid at closing by cashier’s check from the seller.
He will be paid by the buyer directly, or, if there is a cooperative compensation in place, by the seller directly.
His brokerage will receive a commission check from closing; his broker will compensate Chaz according to the terms of their agreement.
If you sell a home for $143,000, and your commission rate is 5%, what is your commission on the sale of this home?
$7,150
$7,500
$8,580
$9,440
Contact the seller’s agent immediately to resolve the issue before closing.
Handle the issue on closing day.
Wait until after the closing to bring up any issues found in the final walk-through with the seller directly.
What would be a reason for getting a home inspection done before closing on a property?
To check for any defects in the title to the property before purchasing title insurance
To ensure the title is marketable before putting any money down
To get more detailed information about the overall condition of the home and find any defects or repairs that are needed before purchasing the property
To verify the validity of the home price to avoid paying too much
Who is responsible for paying for homeowners insurance?
The buyer
The lender
The seller
The title insurance representative
Broker Mica wants to figure out her commission from her current sale. Which numbers does she need to do this?
Appraised price and commission rate
List price and commission rate
Loan amount and commission rate
Sales price and commission rate
When the property is financed, who is named as an additional insured entity on the homeowner’s insurance policy?
Buyer’s agent
Buyer’s attorney
Lender
Title insurance company
Simi is a buyer’s agent, and she’ll receive compensation paid for by the buyer. The property sold for $425,000. The total compensation will equal 6% of the sales price. This amount will be split evenly between Simi and her brokerage firm. How much will Simi be paid from this sale?
$12,750
$25,500
$3,541
$7,083
Which of the following describes how brokers/licensees go about obtaining their commission?
Providing the affidavit of title at the closing
Providing the attorney or closing agent with a broker statement that shows how much each broker should receive
Receiving a check directly from their client
Recording the deed in the public records
What could be a potential drawback to not getting a home inspection done before closing on the home if the buyer has an FHA loan?
The buyer would be unable to sell the home back to the FHA if there are problems found after closing.
The loan could be terminated.
There could be a breach of title contract.
There might be a cloud on the title.
How will the buyer or seller know where and when the closing is being held?
Their agents will inform them of the date once it’s set.
The lender will inform them according to MDIA rules and regulations.
The seller will set the time and date and is responsible for notifying all parties.
The title insurance company will inform them of a date once the title search is complete.
When would a buyer have a home tested for radon gas?
During a bring down
During a home inspection
During an appraisal
During the final walkthrough
What’s one of the things a licensee must do in order to prepare a client for closing?
Explain who will be at the closing and what to expect.
Perform a home inspection.
Provide an abstract of title.
Provide the Loan Estimate.
How could a home inspection help a buyer at closing?
Guarantees the buyer protection from fixing costly broken items after closing
Identifies any items needing replacement or repairs
Informs them of the actual value of the home
Notifies the buyer of any potential defects in the title history of the property
Prior to the closing, one final inspection should take place. What is this inspection generally called?
Loan commitment
Secondary home inspection
Title commitment
Walk-through
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A seller wants to break even after the broker’s compensation of 5% of the sales price and loan balance of $300,000 are paid. At what price must the house sell?
$150,000
$300,000
$315,789
$450,000
A vacant lot that was purchased for $18,000 three years ago has appreciated 15%. What would its value be today?
$2,070
$20,700
$2,700
$27,000
Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice’s mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar?
$289,850
$370,500
$374,930
$398,020
What’s the interest rate on a $14,000 loan that requires a semi-annual interest payment of $550? Round to the nearest percent.
4%
6%
7%
8%
What is interest?
A quantity chosen as a standard in terms of which other quantities may be expressed.
A value describing one quantity in terms of another quantity.
Money paid consistently at a particular rate for the use of borrowed money.
Provides protection against possible damage.
What did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? Round to the nearest cent.
$237,654.87
$243,671.43
$308,678.16
$334,516.65
You get a loan from the Loan Star Bank to help pay for your home. Find the interest on the loan if you borrowed $12,000 at 10% for one year.
$10
$1,000
$1,200
$12,000
What percentage of loss would the seller have if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $153,000? Round your answer to the nearest percent.
0.06%
12%
6%
95%
The current value of a property is $105,000. What was the original cost of the property if there has been a 30% loss in value?
$105,000
$150,000
$31,500
$350,000
We know that the original loan was for $17,000 with an interest rate of 9.5%. How much interest would be charged if the loan is paid off in 11 months?
$1,416
$1,480
$1,545
$1,615
A property sells for $200,599, which is 15% more than the owner paid eight years ago. What did the owner originally pay for the property (round to the nearest cent)?
$1,337,326.67
$174,433.91
$235,998.82
$30,089.85
What is the calculation used to determine the estimated annual interest amount a borrower will pay on a loan?
Appraised value x interest rate
Interest rate x months in loan term
Loan balance x interest rate
Sales price x interest rate
Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?
$105,163.16
$105,263.16
$105,363.16
$105,463.16
Calculate six months’ interest on a $4,000 loan at 7.5%. Round to the nearest dollar.
$150
$200
$25
$300
You’re working with buyers who are pre-approved for a loan up to $90,000. If they estimate paying $525 per month toward interest, what interest rate are they assuming?
171%
43%
6%
7%
Calculate nine months’ interest on a $6,500 loan at 6.5%. Round to the nearest dollar.
$317
$35
$400
$423
A seller wants to net $10,000 after the broker’s commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?
$250,000
$265,957
$276,596
$650,000
Calculate 10 months’ interest on a $12,500 loan at 6.5%. Round to the nearest dollar.
$605
$677
$68
$813
Calculate eight months’ interest on a $7,500 loan at 7.5%. Round to the nearest dollar.
$10,000
$375
$563
$800
Charley’s loan amount is $212,000, his appraised value is $275,000, and his interest rate is 4.375%. What is his annual interest?
$12,031
$19,265
$772.91
$9,275
Your seller client has an offer for $300,000. If the agreed-upon commission is 5%, what is net to seller before any other costs are taken into account?
$280,000
$285,000
$290,000
$295,000
What’s the annual interest on a $20,000 loan on which the interest rate is 6.5%?
$1,300
$130,000
$3,076
$30,769
What calculation is used to determine the estimated monthly interest amount a borrower will pay on a loan?
(Appraised value x interest rate) ÷ 12
(Interest rate × months in loan term) ÷ 12
(Loan balance × interest rate) ÷ 12
(Sales price × interest rate) ÷ 12
What percentage of profit would the seller make if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $200,599? Round your answer to the nearest percent.
138%
16%
23%
293%
A _____ is made when a property is sold for more than the original price.
Loss
Net to seller
Profit
Proration