Real Estate Prelicensing National Exam Flashcards

Real Estate Prelicensing National Exam Flashcards 56Which of the following entitles operate in the secondary mortgage market?Review Laterlocal banks and lendersmortgage brokersInsurance companiesFNMA -FNMAExplanations (SELECT THIS TO SEE EXPLANATIONS)Fannie Mae, Freddie Mac, Ginnie Mae and Wall Street purchase mortgages on the secondary mortgage market. The remaining are primary mortgage lenders.28A seller signed an exclusive agency agreement with ABC Realty and while that listing was in effect signed an exclusive right to sell agreement with XYZ Realty. While the property was listed, the seller entered into a contract to sell the property to a close family member. Which of the following statements is CORRECT?Review LaterThe seller owes a full commission to both ABC Realty and XYZ RealtyXYZ is entitled to a commissionThe seller owes no commissions because neither brokerage was the procuring cause of the buyerABC Realty is entitled to a commission because that listing agreement was signed first -XYZ is entitled to a commissionExplanations (SELECT THIS TO SEE EXPLANATIONS)Under an Exclusive Right to Sell listing agreement no matter how the property is sold, optioned, exchanged, conveyed or transferred, the firm is entitled to compensation. With Exclusive Agency listings, the listing firm competes against the seller. The seller is not obligated to pay ABC as the brokerage was not the procuring cause.38What type of validity does a contract have when a buyer and seller shake hands on the purchase terms of real property and do not reduce any of the terms down to writing?Review LatervoidvoidablevalidunenforceableComments -voidExplanations (SELECT THIS TO SEE EXPLANATIONS)The contract is legally void according to the Statute of Frauds. Valid contracts have four essential

elements: mutual assent (agreement often demonstrated

with an offer and unconditional acceptance), consideration, lawful objective, and legal capacity (legal age, not drunk, not under the influence of drugs, and not adjudicated insane or in need of a guardian). Void contracts are missing one or more of these elements. For example, the Statute of Frauds requires real estate contracts be in writing so an oral contract to purchase is legally void. The parties to an oral purchase interestingly can continue forward with the transaction, if they desire but have no recourse to seek a remedy for breach. Voidable contracts are binding to one party in a transaction, but not the other.For example, if a landlord enters into a lease with a minor, the minor can get out of the lease contract, but the landlord must abide by the lease terms and conditions.Unenforceable contracts typically arise when both parties have breached therefore neither party can sue the other for remedies because they are both at fault.25A seller has listed his property with one broker however retains the right to find the buyer and avoid paying

commission. This is an example of:Review Latera net

listing.an exclusive listing.an exclusive right to sell listing.an

open listing.-an exclusive listing.Explanations (SELECT THIS TO SEE EXPLANATIONS)Exclusive listing agreements allow the owner to compete with the property owner, where the owner is required to pay compensation to the listing agent

only when the listing agent finds the buyer. An open listing allows the owner to hire more than one broker, while still competing to find the buyer. An exclusive right to sell listing agreement requires the owner to pay commission to the listing brokerage no matter how the property is sold, optioned, exchanged, conveyed or transferred. A net listing obligates the seller to pay the brokerage the funds that the property sells for over and above an agreed-upon net to seller.9Which of the following would be considered a voluntary transfer of title, during life?Review LaterConsummation of saleEscheatAdverse PossessionEminent Domain -Consummation of saleExplanations (SELECT THIS TO SEE EXPLANATIONS)Consummation of sale is voluntary, and one has to be alive to sale the property. Eminent domain is a government taking of land for public use.Adverse possession is taking land through long-term adverse use. Escheats occurs after someone dies if he/she does not have an heir.37Which of the following statements regarding contractual remedies is TRUE?Review LaterCompensatory damages are generally awarded as a result of foreseeable losses to a partyLiquidated damages would limit the exposure of a buyer in a sales contract to the amount that is predeterminedSpecific performance involves a lawsuit seeking all three types of damages at once.Consequential damages are intended to make a party whole for their actual losses -Liquidated damages would limit the exposure of a buyer in a sales contract to the amount that is predeterminedExplanations (SELECT THIS TO SEE EXPLANATIONS)Damages happen when there is a breach of contract. Compensatory damages are awarded to repay actual losses suffered (think showing receipts).Consequential damages are those awarded as a result of actions (think pain and suffering). Liquidated damages are those that are decided in advance by the buyer and seller to prevent the first two types of damages from being an issue. A suit for specific performance is one in which the buyer issuing the seller to force the completion of the sale of the property.14Which of the following is TRUE regarding lead laws when selling residential real property built before 1978?Review LaterSellers must disclose all lead-based paint hazards within 10 days of contract acceptance.Sellers have no particular obligation for homes built prior to 1978.Sellers must provide a mandatory disclosure form to buyers informing them of the possibility of lead-based paint hazards in the property.Sellers must diagnose any lead-based paint hazards so they can be disclosed to buyers before the transaction.-Sellers must provide a mandatory disclosure form to buyers informing them of the possibility of lead-based paint hazards in the property.Explanations (SELECT THIS TO SEE EXPLANATIONS)Residential property built prior to 1978 may have lead-based paint hazards and sellers are required to provide a mandatory disclosure form stating such. Sellers are NOT obligated to find out if their property has lead-based paint....just notify the buyer of the possibility and allow the buyer to test if they like. The buyer is allowed 10-days to test for lead. The seller is not required to pay for remediation.51A borrower interested in reducing the interest rate for the life of the loan is most likely to inquire about which of the following items?Review Laterdebt servicePI paymentsAPRdiscount points -discount pointsExplanations (SELECT THIS TO SEE EXPLANATIONS)Discount points are prepaid interest and lower your interest rate by one eighth of a percent. The cost of one discount point is equal to 1% of loan amount (not sale price). APR is the true cost of credit and is a

combination of the interest rate plus all other fees. Debt service is a synonym for principal and interest payments.