National PSI Broker Exam prep Flashcards

National PSI Broker Exam prep Flashcards A listing agent for bank foreclosure hears that a buyer has expressed interest. At the first meeting, the buyer states, "I am very interested in the property." Under the common law of agency, what is the disclosure obligation of the listing agent to the buyer?A)Disclose that the listing agent is an agent for the seller and the buyer as a customer should not tell the listing agent anything the buyer does not want told to the seller.B)Tell the buyer the listing agent will automatically be a transaction-broker and will maintain confidentiality for both the buyer and the seller.C)Disclose that the listing agent will be a dual agent and will need to treat both parties the same.D)The listing agent does not need to do anything because the buyer has not written an offer.A)The answer is disclose that the listing agent is an agent for the seller and the buyer as a customer should not tell the listing agent anything the buyer does not want told to the seller. Unless the listing agent discloses otherwise or, with the buyer, determines the listing agent will act as a dual agent or transaction-broker, the buyer is a customer.The listing agent is obligated to make sure, through disclosure, that the customer does not share confidential information without knowing it will be told to the seller.

A legal description states: "Commencing at the corner of

Ridge Street and Maple, then east 40 degrees to Elm Ave." This type of description is known asA)metes and bounds.B)rectangular survey.C)lot, block, and subdivision.D)assessor's parcel number.The answer is metes and bounds. The metes-and-bounds method uses a beginning point (the only legal description that will state "starting at"), linear measurement, and compass degrees to describe the perimeter or boundaries of a parcel of land. No other legal description uses a starting point.A new salesperson showing a property has made a number of statements to her buyers. All of the following statements by the salesperson would be considered puffing EXCEPTA)"The best views in the city are in this neighborhood."B)"The finest lake and mountain views in the state are in this neighborhood."C)"This neighborhood has the highest SAT scores."D)"This is the best house in the neighborhood." C)The answer is "This neighborhood has the highest SAT scores." Puffing is making a statement that is clearly an exaggeration of fact. SAT scores are fact; so if this statement is made, then it must be true, or it is fraudulent and not considered to be puffing.A buyer is under contract for a home that is vacant and bank owned. While the buyer and his agent are doing a walk-through inspection, the agent discovers that the recent hail storm caused roof damage. What should be the agent's next step?A)Have the buyer call his insurance agent to see if he is coveredB)Tell the buyer not to worry because the agent is sure the bank will repair the roof before closingC)Tell the listing broker to have the roof replaced or the buyer will terminate the contractD)Disclose the issue to the buyer and then to the listing broker D)The answer is disclose the issue to the buyer and then to the listing broker. The roof damage is a material fact that requires disclosure to all parties. Agents must first report material facts to the party they represent and then to all the other parties in the transaction.A deed restriction is BEST described as aA)requirement set by a grantor and included in the deed that gives the grantor reversionary rights if the grantee fails to abide by

the requirement.B)rule or regulation regarding safe building practices, such as a requirement for structural elements.C)rule set by a developer to help maintain the value of a subdivision. The rule runs with the land and is binding on future owners.D)rule regarding how property can be used (i.e., residential, commercial, agricultural, or industrial).C)The answer is rule set by a developer to help maintain the value of a subdivision. The rule runs with the land and is binding on future owners. Deed restrictions are typically

set by the original subdivision developer and run with the land. The purpose is to help maintain value throughout the subdivision. Requirements set by a grantor are called deed conditions and are used in qualified fee estates. Rules regarding the safety of buildings are building codes and rules regarding how property is used are zoning regulations.Brokerage firm trust accounts must be aA)demand account.B)certificate of deposit account.C)mutual fund account.D)savings account.A)The answer is demand account. Demand accounts allow the broker to deposit and withdraw funds without restrictions. Savings, certificates of deposits, and mutual fund accounts often have restrictions on funds and the amount of time they must stay in the account.The main purpose and function of state laws requiring brokerage firms to have trust accounts isA)to have a safe place to keep commissions belonging to salespeople and funds from buyers and sellers.B)so the state can audit the firm at any time.C)to have a safe place and additional protection for funds that don't belong to the firm.D)to enable the brokerage to keep operations and funds from buyers and sellers in the same account.c)The answer is to have a safe place and additional protection for funds that don't belong to the firm. Trust accounts hold money from the public and are not allowed to hold the firm's operations funds or earned commissions.A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final loan amount the lender will lend the buyer is determined by theA)lower of the sales price or appraised value.B)higher of the sales price or appraised value.C)sales price only.D)appraised value only.A)The answer is lower of the sales price or appraised value. The loan-to-value (LTV) ratio is determined by the lower of the sales price or appraised value.The length and type of coverage for a pre-owned home warranty program is determined byA)each state.B)the warranty contract.C)federal law.D)tradition.B)The answer is the warranty contract. The warranty contract will determine the length and type of coverage for warranty programs.A property is under contract. During the inspection, the buyer finds major structural issues that the seller is unable to correct before closing. The buyer and the seller agree to terminate the contract, which is known asA)a valid contract which has become voidable by both parties.B)specific performance for both parties with no monetary remedy.C)mutual rescission of the contract.D)a void contract with parties in agreement.C)The answer is mutual rescission of the contract. Mutual rescission is when both parties return to their original state with all things of value, such as earnest money, also returned.A seller has agreed to act as the buyer's bank. The seller and the buyer signed a contract for deed to help the buyer purchase the seller's home. When will the buyer receive possession and title?A)Full rights of possession and full legal title are received upon making the final loan payment.B)Partial legal title and full rights of possession are received at closing.C)Title is received as agreed to in the contract, and possession is received upon making the final loan payment.D)Possession is received as agreed to

in the contract, and title is received upon making the final loan payment.D)The answer is possession is received as agreed to in the contract, and title is received upon making the final loan payment. A contract for deed is a type of seller financing in which the seller holds the deed/title until the buyer has made the final payment. The buyer takes possession as defined in the contract, typically upon payment of the down payment, and will receive title when final payment to the seller is made.