agency Flashcards - cost in a property management budget?A » Repai...

agency Flashcards Which of the following items would be considered a fixed cost in a property management budget?A » Repair of roofB » UtilitiesC » Replacement of furnaceD » Real estate taxes D(D) Real estate taxes are fixed for the entire year and would not change. (A) Repair of roof, (B) utilities and (C) replacement of furnace would all be variable costs as these vary throughout the year.Which of the following actions by a listing agent would be appropriate?A » Advise the buyer that the seller will take less than the list priceB » Advise the buyer that the seller is going through a divorceC » Advise the buyer on the amount of money necessary to assume a loanD » Advise the buyer that the seller's home has been on the market for 180 days C(C) Here, the buyer would be a customer. Disclosing the amount of the assumed loan would be appropriate.Advising the buyer that (A) the seller would take less, (B) the seller is going through a divorce or (D) the seller`s home has been on the market for 180 days would be a breach of ficuciary obligation to the seller.A seller sold a commercial property with a closing date of November 20, 2003. The seller had pre-paid $3,224 for an annual hazard insurance policy which began on August 13,

• The buyer assumed the hazard insurance policy with

the seller being responsible for the closing date. Assuming a 360 day year, what would be the amount for the insurance proration?A » $ 825.00B » $ 879.00C »

$2,347.00D » $2,849.00

C$3,224 divided by 360 days equals $8.96 per day. The buyer owes from November 21st to August 12th, which is a total of 262 days (using 30 day months). 262 times $8.96 = $2,347 that the buyer owes to the seller.The agency relationship normally established between a

managing broker and aselleris a:A » general agencyB »

universal agencyC » special agencyD » ostensible agency C(C) A special agency is representing a person one time in one area. (A) A general agency is representing a person in lots of areas on a continuous basis, such as a property manager. (B) A universal agency is representing a person in all areas. (D) An ostensible agency means an agency appears to exist - very similar to implied agency which is created based on actions.

A licensee could be an agent for:A » the licensee's own

managing broker onlyB » any managing broker who has a listing participating in the multiple listing serviceC » any licensee or broker in the firmD » a seller or a buyer AThe (A) answer is best as a licensee only represents or is an agent for one`s own managing broker. (B) is incorrect as a licensee does not act for any managing broker in the multiple listing service, just the licensee's own managing broker. (C) A licensee is not an agent for any licensee or broker in the firm, rather just their own managing broker.(D) is also incorrect as a licensee is an agent for their own managing broker while the managing broker is legally the agent for a seller or buyer client.A seller of a rental property had collected monthly pre-paid rent of $600.00 on the first of the month. Closing was to take place on the 17th of the month with the seller being responsible for the closing date. Assuming a 30 day month, what would be the amount of the rent proration?A » $260B

» $280C » $320D » $340

A$600 divided by 30 days = $20 per day of rent. Since the seller is responsible for the closing date, the 30th of the month minus the 17th of the month leaves 13 days that the buyer should receive of the pre-paid rent money. $20 per day times 13 days = $260.

A property had 10 rental units. The leases had been signed after the mortgage was recorded on the public record. The property was later foreclosed on but the leases were not disturbed. Which of the following clauses must have been included in the mortgage?A » SubrogationB » Non-disturbanceC » DefeasanceD » Exculpatory B(B) A non-disturbance clause is a statement by the lender that, if forced to foreclose, the lender will allow the tenants to stay in the property. Large tenants usually request this before spending money on a leased unit. Subrogation (A) is an assignment of rights to an insurance company in return for payment of a claim. Defeasance (C) clause renders a mortgage null and void after the note is paid off. (D) The exculpatory clause is not testable.A managing broker listed a property with a seller on an exclusive right to sell basis. The managing broker would

NOT be due a commission if the property was sold by:A »

the managing brokerB » the sellerC » an attorneyD » a sheriff D(D) is correct because if the property was sold by the sheriff, this would be at a foreclosure sale. Foreclosure on a property normally terminates a listing. (A), (B), and (C) are all incorrect as under an exclusive right to sell listing, the broker is the sole person authorized to sell and receive a commission. Therefore, if the broker, seller or attorney sold the property, the broker would still be due a commission.What type of maintenance would a property manager be performing in the changing of a furnace filter on a property?A » Preventive maintenanceB » Constructive maintenanceC » Corrective maintenanceD » Limited maintenance A(A) Preventive maintenance, such as changing a furnace filter, is designed to prevent actual breakdowns or problems with the equipment. (B) Constructive maintenance is a nonsense term. (C) Corrective maintenance is actually fixing a problem, such as a leaky pipe. (D) Limited maintenance is not a valid term.How much will a seller net after paying a 7% commission and $350 for closing costs on a property that sold for

$50,000?A » $46,150B » $46,175C » $46,500D » $50,000

A$50,000 times 7% equals $3,500. $50,000 minus $3,500 minus $350 equals $46,150.In a typical property management agreement, which would NOT be included?A » The property manager's salaryB » The allowable vacancy rateC » The property manager's functionsD » A description of the property BSince the vacancy rate is usually not a condition of employment, it is usually not in the employment agreement.It is also something that would change often.A buyer's agent was showing a buyer a property that was listed for sale. No dual agency existed on this transaction.

The seller would be considered a:A » client of the buyer's

agentB » customer of the buyer's agentC » principal of the buyer's agentD » prospect of the buyer's agent B(B) If no dual agency exists, then the buyer`s agent must be an agent of the buyer only, making the buyer the client and the seller the customer. (A) & (C) The words client and principal mean the same thing. In this question, the buyer would be the client or principal, not the seller. (D) A prospect is just a general term.A closing was to take place on June 15th. The sales price was $150,000. The seller's current loan balance was $115,000 with an 8% interest rate while the buyer was obtaining a 90% loan at 7%. The taxes of $600, paid in arrears, were to be prorated to closing with the seller being responsible for the closing date. What would be the amount of the tax proration?A » $275B » $325C » $475D » $600 A$600 divided by 360 = $1.67 per day for taxes x 165 days

= $275.

Which of the following statements BEST describes the difference between an exclusive right to sell listing versus an open or an exclusive agency listing?A » An exclusive

right-to-sell agreement enables the seller to negotiate a commission; the others do notB » An exclusive right-to-sell agreement permits the seller to sell their house without paying a fee; the others do notC » An exclusive right-to-sell appoints only one agent; the others do notD » An exclusive right-to-sell guarantees the broker a commission if sold; the others do not D(D) Under an exclusive right to sell, the managing broker is guaranteed a commission upon sale. An open listing allows other brokers and the seller to sell it without paying

the listing broker a commission. An exclusive agency allows the seller to sell it without paying the broker a commission. All allow commission negotiation (A). (B) is backwards. (C) is wrong in that an exclusive agency only appoints one broker also.An owner listed a property with a managing broker on May 1st. On July 1st the owner was declared legally insane. The managing broker brought a full price offer on July 3rd to the seller which was accepted. How much commission is the managing broker due?A » The full commission as the managing broker brought in a ready, willing and able buyerB » The full commission as the seller accepted the offerC » No commission since the property was not sold within the protected periodD » No commission since the listing was terminated when the owner was declared legally insane DInsanity cancels a listing automatically. The managing broker did not earn a commission until AFTER the listing was terminated (D). Even though the seller accepted the offer, it is void since the owner had already been declared to be insane (B). The issue of a protection period (C) is irrelevant as a protection period just protects a managing broker from a seller waiting until after the listing expires and then selling to a buyer the managing broker had procured.A buyer was purchasing a lot through a real estate licensee. The buyer asked the licensee to recommend a builder. What would be the licensee's best course of action?A » Obtain a verbal release from the buyer regarding the recommendation of the builderB » Recommend a builder with a good track recordC » Suggest the buyer contacts at least three builders and have the buyer make the choice on the builderD » Obtain a written release from the buyer and then recommend a builder with whom the licensee has worked with in the past C(C) Suggesting three builders with the buyer making the decision is the best course of action for an agent to take.(A) Obtaining verbal releases is NOT a good way for an agent to avoid litigation. (B) Recommending a builder could open the agent to liability for that builder. (D) Obtaining a release and then recommending a builder is still NOT the best way for an agent to reduce risk.A buyer and seller entered into a contract for the purchase of a house. The seller purposely did not disclose the fact that the roof leaked. The buyer has recourse under what body of law?A » Statute of FraudsB » Regulation ZC » RESPAD » Latency defects DA latent (hidden) defect must be disclosed (D). The statute of frauds (A) says that certain contracts must be in writing. Regulation Z (B) is the truth in lending law. RESPA (C) mandates that settlement procedures be performed in a certain manner.A seller wanted to net $20,000 on the sale of property. The seller had a first mortgage on the property of $61,800. The managing broker charged a 7% commission with the seller also having to pay $2,000 in closing costs. What would the sale price have to be?A » $ 89,666.00B » $ 90,107.53C » $

92,475.24D » $ 95,683.82

B$20,000 net plus $61,800 mortgage plus $2,000 closing costs equals $83,800. $83,800 divided by 93% equals

$90,107.53.

An agent obtained a 4 month listing on a restaurant at 6% commission. Two weeks later the restaurant burned down.Which of the following actions BEST describes what the agent should do in this situation?A » The agent should notify the MLS to change the listing to read "vacant land".B » The agent should do nothing since the agency is now