National PSI Brokers Real Estate Exam I Flashcards

National PSI Brokers Real Estate Exam I Flashcards The discriminatory practice of guiding ethnic minorities toward available housing in neighborhoods made up of residents of the same ethnic group is referred to as1.puffing.2. steering.3. redlining.4. blockbusting.

2.Puffing is sales psychology. Redlining is selecting specific areas and choosing not to make loans in that area; the areas generally are composed of members of protected classes. Blockbusting is panic peddling. page 166 A sale closed on July 29. Real estate taxes of $2,380 for the current year have not been paid. What is the settlement sheet entry for the proration of real estate taxes?1. Credit seller $1,381.70; debit buyer $1,381.702. Debit seller $998.30; credit buyer $1,381.703. Debit seller $1,381.70; credit buyer $1,381.704. Debit buyer $00.00; credit seller

$2,380.00

3.$2,380 ÷ 12 months = $198.333 per month. 2,380/ 360 = 6.611$198.33 ÷ 30 days = $6.611 per day$198.33 × 6 months = $1,189.98$6.611 × 29 days = $197.719$1,189.88

• $191.719 = $1,381.699 or $1,381.70The taxes for the

year have not been paid, and when they are, the buyer will be in possession and have to pay the bill. The seller, therefore, must pay (be debited) for the portion of the year that he occupied the property. The buyer receives a credit for the same amount. page 187-189 Which of the following statements correctly identifies a defining characteristic of conventional mortgages?1. They are assumable.2. There is no down payment.3. They are guaranteed by the federal government.4. Their interest rates are set by the lender.

4.A conventional mortgage is neither insured nor guaranteed by the government. A down payment generally is higher than with insured and guaranteed loans. page 74 Which of the following terms identifies the practice of charging loan interest rates in excess of the maximum allowed by law?1. Usury2. Leverage3. Arbitrage4. Novation 1.Leverage is using other people's money to finance an investment. Arbitrage refers to buying and selling credit instruments to profit from differences in prices. Novation occurs when a new obligation is substituted for an old one.page 80 An estate in real property often described as being a potentially perpetual estate is1. a fee simple estate.2. a base fee estate.3. a freehold estate.4. a fee simple defeasible.

1.A fee simple estate continues for an indefinite period and is inheritable by heirs of the owner. page 25 You are preparing a competitive market analysis (CMA) on a two-story, three-bedroom house with one bathroom on the first floor and all of the bedrooms on the second floor.The appraisal term thatBESTidentifies how this affects the list price is1. physical deterioration.2. deferred maintenance.3. functional obsolescence.4. economic obsolescence.

3.Functional obsolescence is a loss in value due to a deficiency in the floor plan or design of the house. page 61 A broker has listed a home. The broker is generally considered to have earned her commission when1. she submits an offer to purchase to the seller.2. the seller indicates that he thinks an offer to purchase is acceptable.3. she finds a "buyer ready, willing, and able" to buy on the terms of the listing.4. the closing takes place.

3.It is important to distinguish between earning and receiving a commission. page 120

All of the following statements correctly describe joint tenancyEXCEPT1. it is a form of co-ownership.2. owners have the right of survivorship.3. owners must be husband and wife.4. owners may partition the property.

3.The owners must be husband and wife in tenancy by the entirety. page 27

• Which of the following statements correctly describes the

way in which a listing broker should represent her client?1.The listing broker can tell a prospective buyer the lowest price her client will accept.2. The listing broker may choose which offers to present to her client.3. The listing broker with two offers may hold back on presenting the second offer until her client has responded to the first offer.4. The listing broker must present all offers to her client promptly when received.

4.The listing broker is required to prepare, as well as submit, all offers unless otherwise instructed. The broker does not have the authority to accept or reject those offers for the seller. page 94-95 With an FHA loan, the buyer will be required to do all of the followingEXCEPT1. pay a 20% down payment.2. find an approved lender willing to make the loan.3. buy a house that meets minimum FHA safety standards.4. buy mortgage insurance to protect the lender.

1.The buyer's down payment on an FHA loan is 3.5% plus closing costs. page 77 You listed a home for sale under an exclusive-right-to-sell agreement and showed the property to a person who wrote an offer with an earnest money check that was subsequently rejected by the owner. What should happen to the earnest money check?1. It should be deposited into the broker's trust account.2. It should just be returned to the buyer.3. It should be returned to the buyer only after the seller signs a release form.4. It should be given to the seller.

2.The offer was not accepted and therefore not ratified. The earnest money was returned before it was even deposited into the broker's trust account. page 94 A salesperson has taken a four-month exclusive-right-to-sell listing on a house. Prior to the expiration of the listing, the salesperson leaves the state and inactivates her license. Which of the following correctly describes the status of the listing?1. The listing automatically terminates when the salesperson leaves the state and inactivates her license.2. The seller may terminate the listing once the salesperson has left the state.3. The broker will have to negotiate with the seller to retain the listing.4. The listing will continue as a valid contract between the seller and the broker.

4.The salesperson is an agent of the broker. When the salesperson no longer is employed by the broker, the broker retains any unsold or unexpired listings. The status of the listings remains unchanged. page 119 You would like to hire more than one broker to sell your house and be able to sell the house yourself without paying a commission to a broker. Which of the following listing agreements should you choose?1. Net2. Open3. Exclusive agency4. Exclusive-right-to-sell 2.Under an open listing, if the seller personally sells the property without the aid of any broker, the seller is not obligated to pay the commission. page 119 A broker has been showing homes to some prospects. The prospects have learned of a home for sale by its owner,

which they are interested in visiting. The broker calls the owner to arrange a showing, although the owner will not list with the broker. The broker shows the home and writes the offer to purchase, which is accepted by the owner. Which of the following statements correctly describes this situation?1. The owner is legally bound to pay the broker a commission.2. The prospects are responsible for paying a commission to the broker.3. The owner and the prospects are legally bound to pay a commission to the broker.4.Neither the owner nor the prospects are legally bound to pay a commission to the broker.

4.The broker is not entitled to a commission, because he had no contractual agreement with the buyer or the seller.

page 91 The principle of combining contiguous property, and, by doing so, increasing the value of the new property, is called the principle of1. highest and best use.2. substitution.3.contribution.4. plottage.

4.The actual process of combining these properties into one is called assemblage. page 64 During a listing presentation, the seller tells the broker that she will not sell to Caucasians. Should the broker follow the seller's instructions?1. Yes. The owner has a right to choose prospective buyers.2. Yes. The broker is the seller's agent and must honor his fiduciary responsibility.3.No. The broker might lose any commission by limiting potential buyers.4. No. The broker should not accept the listing.

4.It is illegal under federal fair housing laws to accept a listing that involves discrimination, such as refusing to sell to members of a protected class. page 164-165 Which of the following types of depreciation is incurable?1.A leaky roof2. A worn-out water heater3. A zoning variance of the neighbor's property for commercial use4. Warped doors 3.A zoning variance for commercial use is economic or locational obsolescence, which would be incurable. (61) An investor finds that the cost of installing an air-conditioning system in an office building is greater than is justified by the rental increase that might result from the improvement of the property. However, the investor installs the air-conditioning to avoid having tenants move to comparable office space nearby that is air-conditioned. The investor's decision isMOSTreflective of the principle of1.anticipation.2. competition.3. contribution.4. highest and best use.

2.If the air-conditioning system is installed because of saleability, it would be contribution. In this case, the installation was due to the market availability of air-conditioned space. page 59 Which of the following would be considered real property?1. A leasehold estate2. Fixtures3. Chattels4.Trade fixtures 2.A leasehold estate, chattels, and trade fixtures are classified as personal property. page 21 A parcel of property that measures 1/8 mile by 1/8 mile is equal to1. 10 acres.2. 40 acres.3. 160 acres.4. 320 acres.

1.8 × 8 = 64640 res ÷ 64 = 10 acres page 22 Which approach to value is an appraiserMOSTlikely to emphasize in the appraisal of a single-family home?1. Cost approach2. Gross income multiplier approach3. Income capitalization approach4. Sales comparison approach 4.The sales comparison approach is considered the most reliable of the three approaches in appraising residential property. page 61